Economics Private And Public Choice: Ch. 1,2

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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)


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