Chapter 1: The Nature and Method of Economics

126353839	Economics	Social science. Assumes infinite wants, but goods and services are limited, so that there are not enough resources to fulfill our wants.
126353840	Rational Self Interest	People make decisions based on what is best for them.
126353841	Scarcity	Resources are limited.
126353842	Opportunity Cost	In order to get something I want, I must give up the ability to get something else.
126353843	Marginal Analysis	Study of the change in decision making when the economy changes slightly.
126353844	Ceteris Paribus	Assumes "all other things equal", making it possible to study economics.
126353845	USA Economic Goals	Economic Growth, Full Employment, Economic Efficiency, Price Level Stability, Economic Freedom, Equitable Distribution of Money, Economic Security, Balance of Trade
126353846	Trade Offs	Things/Goals we sacrifice in order to get something else.
126353847	Macroeconomics	study of economics as a whole and basic subdivisions such as the government, households, and markets.
126353848	Microeconomics	Study of specific, smaller units of the economy such as the price of one product of the output of one worker.
126353849	Aggregate	Total
126353850	Positive Economics	Focuses on facts that are currently testable.
126353851	Normative Economics	Focuses on what the economy should or could be.
126353852	Consumer Goods	Satisfy our immediate needs or wants.
126353853	Capital Goods	Goods for the future. Ex: factory.
126353854	Land	Natural resources such as forests and oil.
126353855	Capital	Manufactured goods that aide in producing consumer goods.
126353856	Investment	When capital is purchased.
126353857	Labor	The physical and mental talents available in producing goods.
126353858	Entrepreneurial Ability	Includes initiative, decision making, innovation, and risk bearing.
126353859	FOP	Factors of Production/Inputs: Land, Capital, Labor, Entrepreneurial Ability
126353860	Rental Income	Money received from supplying land(raw materials).
126353861	Interest Income	Money received from renting machinery or capital(loaning money).
126353862	Wages	Income from labor.
126353863	Profit	Income from entrepreneurial ability. Can be negative.
126353864	Full Employment	All Factors of Production are in use.
126353865	Full Production	Achieving maximum output.
126353866	Productive Efficiency	Production of goods in the least expensive way.
126353867	Allocative Efficiency	Producing the right group of goods.
126358301	PPF	Production Possibilities Frontier: Demonstrates that we must produce less of one good if we choose to produce more of another good.
126358302	Underutilization	When a country is not fully employing its resources.
126358303	Law of Increasing Opportunity Cost	The more of a product is produced, the greater the opportunity cost.
126358304	Marginal Cost	Cost of producing one more unit.
126358305	Marginal Benefit	Benefit of producing one more unit.
126358306	Market System	Capitalism: Incorporates Rational Self Interest, Economic Freedom, competition for limited resources, and sometime "Laissez-faire".
126358307	Command System	Socialism/Communism: Government decides how much and what to produce, and controls all Factors of Production. North Korea and Cuba.
126358308	Circular Flow Model	Explains Market System. Resources are traded between Households, Resource Market, Businesses, and the Product Market.