Economics Private And Public Choice: Ch. 1,2
Ceteris Paribus
"other things constant"
Outward shift in PPC
1.^in resource base 2.^in technology 3.^in the rules of trade 4.^in work
Private Property Rights
1.right to exclusive use 2.legal protection against invaders 3.right to transfer
Socialism
1.state controls basic means of production 2.resource allocation is determined by spcenterslized planning, NOT by market forces
Secondary Effects
Economic consequences of an economic change that are not immediately identifiable, but felt with the passage of time
Economic goods
a good/product that is scarce
Competition
a natural outgrowth of scarcity
Middleman
a person who buys and sells, or who arranges trades. They reduce transaction costs
Market Organization
allows unregulated proces and decentralized decisions of private owners to resolve basic econ. probs.
Resource
an imput used to produce eonomic goods
Economic Behavior
choosing with the objective of gaining a specific benefit at the least possible cost
Voice
communication of desires, complaints and sugguestions to decision makers in order to send a message (marketplace)
Innovation
creation of a new product or process
Production Possibilities Curve
curve that outlines all possibie contributions of total output that could be produced.
Scientific Thinking
development of a theory from basic postulates and the testing of the implications of that theory as to their consistiency with events in the real world
Capitalism
econ. system based on private ownership of product resources and allocation of goods according to the signals provided by market prices
Microecnomics
economics on the scale of the individual or inside business firms
Macroeconomics
economics on the scale of the whole market (labor market)
Fallacy of Competition
erronious view that what is true for the part is true for the whole
Capital
human made resources
Law of Comparative Advantage
individuals, firms or nations can gain by specilizing in the production of goods with the lowest opportunity cost.
Normative Economics
judgements about "what ought to be" -opinion
Human Resources
knowledge, skill, strength
Natural Resources
land, minerals, oceans, rivers
Division of Labor
method that breaks down the production of a commodity into a series of specific tasks, each by different workers
Entrepeneur
profit-seeking decision maker who decides which projects to undertake and how to do them
Collective Decision Making
relies on public sector decision making (voting, political bargining)
Economic Theory
set of deffinitions, postulates, and principles assembled to make "cause and effect" clear
Choice
the act of selecting among alternatives
Rationing
the allocation of a limited supply of goods/resources to those that want more
Utility
the benefit or satisfaction expected from a choice or cource of action
Marginal
the effects of a change in the current situation. It determins good/bad decisions
Opportunity Cost
the highest valued alternative that must be sacrificed because of choice
Scarcity
the idea that goods are less avaliable then the consumer would like
Capital Formation
the production of buildings, machinery, tools etc. that enhance future production ability
Property Rights
the right to use, control and obtain the benefits from a good or service
Economics
the science which studies human behavior as a relationship between ends and scarce means which have alternative users
Positive Economics
the scientific study of "what is" among econ. relationships -facts
Technology
the technological knowledge available at any given time
Transaction Costs
the time, effort and all other resources needed to search out, negotiate and consume an exchange
Average
the total production cost divided by the number of units
Physical Resources
tools, machines, buildings
Exit
withdrawl from an econ. relationship with a decision maker in order to get a point across (pol decision-making)
