What Is Economics
The fundamental economic problem that arises because human wants are unlimited, but resources are limited.
What is scarcity
Basic requirements needed for survival, such as food, clothing, and shelter.
What are needs?
A false belief or error in reasoning applied to economic thinking.
What is an economic fallacy?
The value of the next best alternative given up when making an economic choice.
What is opportunity cost
A mathematical relationship where two variables move in opposite directions—as one increases, the other decreases.
What is an inverse relationship?
The term economists use to measure the satisfaction or pleasure derived from consuming a good or service.
What is utility?
A theoretical, imaginary unit of measurement used by economists to quantify satisfaction or pleasure.
What are utils?
The mistaken assumption that what is true for one individual must also be true for the entire group or whole.
What is the fallacy of composition?
Products intended for direct consumption by individuals, such as food or clothing.
What are consumer goods?
A mathematical relationship where two variables move in the same direction—as one increases, the other also increases.
What is a direct relationship?
The branch of economics that focuses on facts and cause-and-effect relationships without making value judgments.
What is analytical (or positive) economics?
To make decisions that yield the maximum possible satisfaction or value from limited resources.
What is to economize?
The mistake of assuming that Event A caused Event B simply because Event A happened before Event B.
What is the post hoc fallacy (or cause-and-effect fallacy)?
Goods used by businesses to produce other goods and services, such as machinery, factories, and tools.
What are capital goods?
The law stating that as an economy produces more of a specific item, the opportunity cost of producing additional units continues to rise.
What is the law of increasing opportunity (or relative) cost?
The branch of economics that expresses value judgments or opinionated statements about what economic policy ought to be.
What is normative (or policy) economics?
Economics is categorized as this type of academic field because it studies human behavior and societal decisions.
What is a social science?
The mistake of assuming an economic event has only one simple cause when it actually has multiple contributing factors.
What is the fallacy of single causation?
On a PPC graph, any point plotted completely outside of the curve represents this level of production given current resources.
What is unattainable production?
The economic principle stating that as additional units of a variable input are added to fixed inputs, the additional output produced eventually grows smaller.
What is the law of diminishing returns?
Individuals, groups, or organizations that have an interest in or are affected by the actions and decisions of an economy.
who are stakeholders?
The key distinction between these two concepts is that one means achieving a specific goal, while the other means achieving that goal with the minimum amount of wasted resources.
What are effective vs. efficient use of resources?
In an economic model, this variable changes as a result of changes made to another independent factor.
What is a dependent variable?
Any point plotted strictly inside the PPC curve indicates that resources are being used in this manner.
What is inefficient production
The principle stating that increasing all production inputs proportionally results in a greater-than-proportional increase in output.
What is the law of increasing returns to scale?