Economic Basics
The social science that studies how people make choices among alternatives.
What is economics?
The value of the best alternative forgone when making a choice.
What is opportunity cost?
A testable statement about the relationship between variables.
What is a hypothesis?
Human effort used in production.
What is labor?
The ability to produce a good at a lower opportunity cost.
What is comparative advantage?
The central problem that arises because wants are unlimited but resources are limited.
What is scarcity?
Economists assume people generally act in pursuit of this.
What is self-interest?
The assumption that all other factors remain unchanged.
What is ceteris paribus?
Skills, education, and training that make workers more productive.
What is human capital?
Producing goods in which you have a comparative advantage.
What is specialization?
A good for which using it one way means giving up another use.
What is a scarce good?
Decisions involving doing a little more or a little less of an activity.
What are choices at the margin?
Something whose value can change.
What is a variable?
A PPC point located inside the curve.
What is inefficient production?
Benefits from exchanging goods after specialization.
What are gains from trade?
Name the three fundamental economic questions every society must answer.
What, how, and for whom to produce?
Besides tuition, this major cost should be included when calculating the cost of college.
What is forgone income?
A statement expressing an opinion or value judgment.
What is a normative statement?
The law that causes the PPC to bow outward.
What is the Law of Increasing Opportunity Cost?
Trade allows consumption combinations _______ the PPC.
What is outside the PPC?
An economic system where resources are primarily owned by private individuals.
What is a market capitalist economy?
The current level of an activity.
What is the margin?
Assuming one event caused another because they occurred together.
What is the fallacy of false cause?
What is economic growth?
Comparative advantage is determined by comparing this.
What is opportunity cost?