Textbook vocabulary based upon McEachern Economics: A Contemporary Introduction 8e
Unit 1: Chapters 1-4 and 6
Terms : Hide Images
| 604125012 | Economics | social science dealing with the study of how people satisfy seemingly unlimited and competing wants with the careful use of scarce resources. Chapter 1 | |
| 604125013 | Resources | also called factors of production, are all the things used in producing goods and services. Chapter 1 | |
| 604125014 | Labor | human effort, physical and mental effort, directed toward producing goods and services. Chapter 1 | |
| 604125015 | Capital | The buildings, equipment, and human skills used to produce goods and services. Chapter 1 | |
| 604125016 | Natural Resources | All gifts of nature used to produce goods and services; includes renewable and exhaustible resources. Chapter 1 | |
| 604125017 | Entrepreneurial ability | Managerial and organizational skills needed to start a firm, combined with the willingness to take the risk of profit or loss. | |
| 604125018 | Entrepreneur | A profit-seeking decision maker who starts with an idea, organizes an enterprise to bring that idea to life, and assumes the risk of the operation. Chapter 1 | |
| 604125019 | Wages | Payment to resource owners for their labor. Chapter 1 | |
| 604125020 | Interest | Payment to resource owners for the use of their capital. Chapter 1 | |
| 604125021 | Rent | Payment to resource owners for the use of their natural resources. Chapter 1 | |
| 604125022 | Profit | Reward for entrepreneurial ability; sales revenue minus resource cost. Chapter 1 | |
| 604125023 | Good | A tangible product used to satisfy human wants. Chapter 1 | |
| 604125024 | Service | An activity, or intangible product, used to satisfy human wants. Chapter 1 | |
| 604125025 | Scarcity | Occurs when the amount people desire exceeds the amount available at a zero price. Chapter 1 | |
| 604125026 | Market | A set of arrangements by which buyers and sellers carry out exchange at mutually agreeable terms. Chapter 1 | |
| 604125027 | Product Market | A market in which a good or service is bought and sold. Chapter 1 | |
| 604125028 | Resource Market (aka Factor Market) | A market in which a resource is bought and sold. Chapter 1 | |
| 604125029 | Circular-Flow Model | A diagram that traces the flow of resources, products, income, and revenue among economic decision makers. Chapter 1 | |
| 604125030 | Rational Self-Interest | Individuals try to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit. Chapter 1 | |
| 604125031 | Marginal | Incremental, additional, or extra; used to describe a change in an economic variable. Chapter 1 | |
| 604125032 | Microeconomics | The study of the economic behavior in particular markets, such as that for computers or unskilled labor. Chapter 1 | |
| 604125033 | Macroeconomics | The study of the economic behavior of entire economies. Chapter 1 | |
| 604125034 | Economic theory or Economic model | A simplification of reality used to make predictions about cause and effect in the real world. Chapter 1 | |
| 604125035 | Variable | A measure, such as price or quantity, that can take on different values at different times. Chapter 1 | |
| 604125036 | Ceteris Paribus | The assumption, when focusing on the relation among key economic variables, that other variables remain unchanged. Aka Other-things-constant assumption Chapter 1 | |
| 604125037 | Behavioral assumption | An assumption that describes the expected behavior of economic decision makers, what motivates them. Chapter 1 | |
| 604125038 | Positive Economic Statement | A statement that can be proved or disproved by reference to facts. Chapter 1 | |
| 604125039 | Normative Economic Statement | A statement that reflects an opinion, which cannot be proved or disproved by reference to the facts. Chapter 1 | |
| 604125040 | Fallacy of Composition | The incorrect belief that what is true for the individual, or part, must necessarily be true for the group, or the whole. Chapter 1 | |
| 604125041 | Post Hoc Fallacy | Aka Association-is-causation fallacy: The incorrect idea that if two variables are associated in time, one must necessarily cause the other. Chapter 1 | |
| 604125042 | Secondary effects | Unintended consequences of economic actions that may develop slowly over time as people react to events. Chapter 1 | |
| 604138426 | Opportunity Cost | The value of the best alternative forgone when an item or activity is chosen. (Chapter 2) | |
| 604138427 | Sunk Cost | A cost that has already been incurred cannot be recovered, and thus is irrelevant for present and future economic decisions. (Chapter 2) | |
| 604138428 | Law of Comparative Advantage | The individual, firm, region or country with the lowest opportunity cost of producing a particular good should specialize in the production of that good. (Chapter 2) | |
| 604138429 | Absolute Advantage | The ability to make something using fewer resources than other producers use to make the same good. (Chapter 2) | |
| 604138430 | Comparative Advantage | The ability to make something at a lower opportunity cost than other producers face. (Chapter 2) | |
| 604138431 | Barter | The direct exchange of one good for another without using money. (Chapter 2) | |
| 604138432 | Division of Labor | Breaking down the production of a good into separate tasks. (Chapter 2) | |
| 604138433 | Specialization of Labor | Focusing work effort on a particular product or a single task. (Chapter 2) | |
| 604138434 | Production Possibilities Frontier (PPF) | Aka PPC A curve showing alternative combinations of goods that can be produced when available resources are used efficiently; a boundary line between inefficient and unattainable combinations. (Chapter 2) | |
| 604264555 | Efficiency | The condition that exists when there is no way resources can be reallocated to increase the production of one good without decreasing the production of another; getting the most from available resources. (Chapter 2) | |
| 604264556 | Law of Increasing Opportunity Cost | To produce more of one good, a successively larger amount of the other good must be sacrificed. (Chapter 2) | |
| 604264557 | Economic Growth | An increase in the economy's ability to produce goods and services; reflected by an outward shift of the economy's production possibilities frontier. (Chapter 2) | |
| 604264558 | Economic System | The set of mechanisms and institutions that resolve the what, how and for whom questions. (Chapter 2) | |
| 604264559 | Pure Capitalism | An economic system characterized by the private ownership of resources and the use of prices to coordinate economic activity in unregulated markets. (Chapter 2) | |
| 604264560 | Private Property Rights | An owner's right to use, rent, or sell resources or property. (Chapter 2) | |
| 604264561 | Pure Command System | An economic system characterized by the public ownership of resources and centralized planning. (Chapter 2) | |
| 604264562 | Mixed System | An economic system characterized by the private ownership of some resources and the public ownership of other resources; some markets are regulated by government. (Chapter 2) | |
| 604264563 | Traditional System | A system in which customs handed down from generation to generation determine how a society is organized to produce, distribute, and consume goods and services. (Chapter 2) | |
| 604264564 | Utility | The satisfaction received from consumption; sense of well-being. (Chapter 3) | |
| 604264565 | Transfer Payments | Cash or in-kind benefits given to individuals as outright grants from the government. (Chapter 3) | |
| 604264566 | Firms | Economic units formed by profit-seeking entrepreneurs who employ resources to produce goods and services for sale. (Chapter 3) | |
| 604264567 | Sole Proprietorship | A firm with a single owner who has the right to all profits but who also bears unlimited liability for the firm's losses and debts. (Chapter 3) | |
| 604264568 | Partnership | A firm with multiple owners who share the profits and bear unlimited liability for the firm's losses and debts. (Chapter 3) | |
| 604264569 | Corporation | A legal entity owned by stockholders whose liability is limited to the value of their stock ownership. (Chapter 3) | |
| 604264570 | Cooperative | An organization consisting of people who pool their resources to buy and sell more efficiently than they could individually. (Chapter 3) | |
| 604264571 | Not-for-profit Organization | Groups that do not pursue profit as a goal; they engage in charitable, educational, humanitarian, cultural, professional or other activities, often with a social purpose. (Chapter 3) | |
| 604264572 | Monopoly | A sole supplier of a product with no close substitutes. (Chapter 3) | |
| 604264573 | Natural Monopoly | One firm that can supply the entire market at a lower per-unit cost than could two or more firms. (Chapter 3) | |
| 604264574 | Private Good | A good, such as pizza, that is both rival in consumption and exclusive. (Chapter 3) | |
| 604264575 | Public Good | A good that, once produced, is available for all to consume, regardless of who pays and who doesn't; such a good is non rival and nonexclusive, such as a safer community. (Chapter 3) | |
| 604264576 | Externality | A cost or a benefit that affects neither the buyer nor seller, but instead affects people not involved in the market transaction. (Chapter 3) | |
| 604264577 | Fiscal Policy | The use of government purchases, transfer payments, taxes, and borrowing to influence economy-wide variables such as inflation, employment and economic growth. (Chapter 3) | |
| 604264578 | Monetary Policy | Regulation of the money supply to influence economy-wide variables such as inflation, employment, and economic growth. (Chapter 3) | |
| 604264579 | Demand | A relation between the price of a good and the quantity that consumers are willing and able to buy per period, other things constant. (Chapter 4) | |
| 604264580 | Law of Demand | The quantity of a good that consumers are willing and able to buy per period relates inversely, or negatively, to the price, other things constant. (Chapter 4) | |
| 604264581 | Substitution effect of a price change | When the price of a good falls, that good becomes cheaper compared to other goods so consumers tend to substitute that good for other goods. (Chapter 4) | |
| 604264582 | Money Income | The number of dollars a person received per period, such as $400 per week. (Chapter 4) | |
| 604264583 | Real Income | Income measured in terms of the goods and services it can buy; real income changes when the price changes. (Chapter 4) | |
| 604264584 | Income effect of a price change | A fall in the price of a good increases consumers' real income, making consumers more able to purchase goods; for a normal good, the quantity demanded increases. (Chapter 4) | |
| 604264585 | Demand Curve | A curve showing the relation between the price of a good and the quantity consumers are willing and able to buy per period, other things constant. (Chapter 4) | |
| 604264586 | Quantity Demanded | The amount of a good consumers are willing and able to buy per period at a particular price, as reflected by a point on a demand curve. (Chapter 4) | |
| 604264587 | Normal Good | A good, such as new clothes, for which demand increases, or shifts rightward, as consumer income rises. (Chapter 4) | |
| 604264588 | Inferior Good | A good, such as used clothes, for which demand decreases, or shifts leftward, as consumer income rises. (Chapter 4) | |
| 604264589 | Substitutes | Goods, such as Coke and Pepsi, that relate in such a way that an increase in the price of one shifts the demand for the other rightward. (Chapter 4) | |
| 604264590 | Complements | Goods, such as milk and cookies, that relate in such a way that an increase in the price of one shifts the demand for the other leftward. (Chapter 4) | |
| 604264591 | Tastes and Preferences | Consumer preferences; likes and dislikes in consumption; assumed to remain constant along a given demand curve. (Chapter 4) | |
| 604264592 | Movement along a demand curve | Change in quantity demanded resulting from a change in the price of the good, other things constant. (Chapter 4) | |
| 604264593 | Shift of a demand curve | Movement of a demand curve right or left resulting from a change in one of the determinates of demand. Price does NOT shift the curve! (Chapter 4) | |
| 604264594 | Supply | A relation between the price of a good and the quantity that producers are willing and able to sell per period, other things constant. (Chapter 4) | |
| 604264595 | Law of Supply | The amount of a good that producers are willing and able to sell per period is usually directly related to its price, other things constant. (Chapter 4) | |
| 604264596 | Supply Curve | A curve showing the relation between price of a good and the quantity producers are willing and able to sell per period other things constant. (Chapter 4) | |
| 604264597 | Quantity supplied | The amount offered for sale per period at a particular price, as reflected by a point on a given supply curve. (Chapter 4) | |
| 604264598 | Movement along the supply curve | Change in quantity supplied resulting from a change in the price of the good, other things constant. (Chapter 4) | |
| 604264599 | Shift of the supply curve | Movement of a supply curve right or left resulting from a change in one of the determinates of supply. Price does NOT shift the curve! (Chapter 4) | |
| 604264600 | Surplus | At a given price, the amount by which quantity supplied exceeds quantity demanded; a surplus usually forces the price down. (Chapter 4) | |
| 604264601 | Shortage | At a given price, the amount by which quantity demanded exceeds quantity supplied; a shortage usually forces the price up. (Chapter 4) | |
| 604264602 | Equilibrium | The condition that exists in a market when the plans of buyers match those of sellers, so quantity demanded equals quantity supplied and the market clears. (Chapter 4) | |
| 604264603 | Disequilibrium | The condition that exists in a market when the plans of buyers do not match those of sellers; a temporary mismatch between quantity supplied and quantity demanded as the market seeks equilibrium. (Chapter 4) | |
| 604264604 | Price Floor | A minimum legal price below which a product cannot be sold; to have an impact, a price floor must be above the equilibrium price. (Chapter 4) | |
| 604264605 | Price Ceiling | A maximum legal price above which a product cannot be sold; to have an impact, a price ceiling must be set below the equilibrium price. (Chapter 4) | |
| 604275223 | Total Utility | The total satisfaction you derive from consumption; this could refer to either your total utility of consuming a particular good or your total utility from all consumption. (Chapter 6) | |
| 604275224 | Marginal Utility | The change in your total utility from a one-unit change in your consumption of a good. (Chapter 6) | |
| 604275225 | Law of diminishing marginal utility | The more of a good a person consumes per period, the smaller the increase in total utility from consuming one more unit, other things constant. (Chapter 6) | |
| 604275226 | Consumer Equilibrium | The condition in which an individual consumer's budget is spent and the last dollar spent on each good yields the same marginal utility; therefore, utility is maximized. (Chapter 6) | |
| 604275227 | Consumer Surplus | The difference between the most a consumer would pay for a given quantity for a good and what the consumer actually pays. (Chapter 6) | |
| 604275228 | Producer Surplus | A bonus for producers in the short run; the amount by which total revenue from production exceeds variable cost. (Chapter 6) |
