Key Terms
What is Economics?
The study of how society makes decisions about scarce resources.
What is the Law of Diminishing Returns?
States that adding more of one input while keeping another constant will eventually lower extra output.
What is a Fallacy?
A hypothesis proven false but still believed by many.
What is a Direct Relationship?
When one variable goes up, the other goes up too.
What are Consumer Goods?
Goods made to satisfy human needs directly (like food or clothes).
What is Utility?
The usefulness or satisfaction gained from consuming an item.
What is the Law of Increasing Returns to Scale?
States that increasing all inputs leads to a faster increase in outputs.
What is the Fallacy of Composition?
Mistakenly thinking what’s good for one is automatically good for all.
What is an Inverse Relationship?
When one variable goes up, the other goes down.
What are Capital Goods?
Goods like tools or machines used to make other products.
What is a Stakeholder?
A person with a vested or personal interest in an economic decision.
What is the Law of Increasing Relative Cost?
The principle that producing more of one good leads to rising opportunity costs.
What is the Post Hoc Fallacy?
Mistakenly thinking that event X caused event Y just because X happened first.
What is Relative Cost?
The cost of producing one good in terms of another.
What is Opportunity Cost?
The value of the next-best alternative given up when making a choice.
What is a Util?
A theoretical unit of satisfaction.
What is the Production Possibilities Curve?
The curve showing maximum production combinations of two goods.
What is the Fallacy of Single Causation?
Believing that an event has one single cause instead of several.
What is the Frontier?
The maximum production line on a production possibilities graph.
What is a Trade-Off?
Giving up one option or resource to get another.
What is Social Science?
Sciences like history, sociology, and economics that study human behavior.
What is the Origin?
The point where the horizontal and vertical axes meet on a graph.
What is an example of a Fallacy of Composition?
The false belief that working harder alone guarantees success for all.
What is Output?
The result produced when land, labor, and capital are used.
What is Efficiency?
Using the bare minimum of resources to achieve a goal.