Definitions
What are positive statements?
Statements that deal with facts and direct observation of the world around us.
This fallacy assumes that there is only one cause for an effect, overlooking other potential causes.
Single Causation
What is scarcity?
The idea that there is not enough of something to satisfy everyone who would like that something.
When a point is inside the PPC, it indicates that resources are not being used to their fullest potential. What term describes this situation?
Inefficiency
What kind of statement is this: "The government should increase the minimum wage to reduce income inequality."
Normative
What are raw materials?
Goods used in the manufacturing of other goods.
If someone claims that wearing a lucky charm caused their sports team to win, which fallacy are they using?
Post Hoc
What you lose when you make one decision over another.
When a Production Possibility Curve (PPC) is a straight line, it indicates that the opportunity cost of producing one good in terms of another is constant. What is the term for this?
Constant opportunity cost
What are the two categories of positive statements?
Descriptive and conditional
What are capital goods?
Goods that can be used to produce more goods.
Which fallacy might involve attributing a rise in graduation rates solely to improved teaching methods?
Single Causation
What is the economic problem?
Resources are limited while human wants are unlimited.
A point outside the Production Possibility Curve (PPC) represents a level of production that is ...?
Unattainable
This branch of economics focuses on individual markets, consumer behavior, and the allocation of resources. What is it called?
Microeconomics
What does efficient refer to?
When we use the bare minimum of resources to achieve the desired result.
In arguing that because each department in a company is performing well, the entire company must be thriving, which fallacy is illustrated?
Composition
What are the four major factors of production? What are the subcategories?
Land (natural resources and raw materials), Labour, Capital (information), Management
If the PPC shifts outward, what does it indicate about an economy's production capacity?
Economic growth
Examining national unemployment rates and inflation levels falls under which branch of economics?
Macroeconomics
What is comparative advantage?
Comparative advantage is when a person, business, or country can produce a good or service at a lower opportunity cost than others.
If someone says that a drop in crime rates is only because of a new policing program and also argues that the drop happened right after the program started, which fallacy are they using?
Single Causation & Post Hoc
What is the law of increasing relative cost?
Some resources have comparative advantage over other resources - therefore opportunity costs increase for each additional good produced.
T or F: Any point on the curve itself is allocatively efficient.
False. It is always productively efficient and may or may not be allocatively efficient.
What does the Greek word "Oikonomia" mean?
Matters relating to household management