Chapter 1

Variable

A measure of something that can take on different values

Marginal Change

A small, one-unit change in value

Positive Analysis

Answers the question "What is?" or "What will be?"

Normative Analysis

Answers the question "What ought to be?"

Natural Resources

Resources provided by nature and used to produce goods and services.

Ceteris Paribus

The Latin expression meaning other variables being held fixed

Entrepreneurship

The effort used to coordinate factors of production-natural resources, labor, physical capital, and human capital- to produce and sell products.

Human Capital

The knowledge and skills acquired by a worker through education and experience.

Labor

The physical and mental effort people use to produce goods and services

Five Factors of production

The resources used to produce goods and services, also known as production inputs. -Natural resources -Labor -physical capital -Human capital -Entrepreneurship

Physical Capital

The stock of equipment, machines, structures, and infrastructures that is use to produce goods and services.

Economics

The study of choices when there is scarcity

Microeconomics

The study of the choices made by households (an individual or group of people living together), firms, and government and how these choices affect the markets for goods and services.

Macroeconomics

The study of the nation's economy as a whole, it focuses on the issues of inflation, unemployment, and economic growth.

scarcity

the resources we use to produce goods and services are limited