Chapter 1 Key Terms Fall 2020
Chapter 1 Ceteris Paribus
Definition A Latin phrase for "with other things the same" or "other things being equal or held constant". Sentence If the coronavirus continues to surge, Ceteris Paribus, the economy would decline. Connection 1. Economics 2. Scientific Method
Chapter 1 Graph
Definition A diagram showing the relation between variable quantities, typically of two variables, each measured along one of a pair of axes at right angles. Sentence I draw graphs a lot during math class. Connection 1. Scientific Method 2. Economy
Chapter 1 Curve
Definition A line or outline which gradually deviates from being straight for some or all of its length. Sentence The economy often curves as it fluctuates due to unintended variables/consequences. Connection 1. Variables 2. Law of unintended consequences
Chapter 1 Incentives matter principle
Definition A principle of economic analysis that basically means everyone responds to incentives. Sentence The incentives matter principle is important in today's economy as everyone is attracted to incentives. Connection 1. Incentives 2. Economics
Chapter 1 Variable
Definition A quantity that may change within the context of a mathematical problem or experiment. Sentence A lot of times in life, there are unexpected variables that change your course of action. Connection 1. Graphs 2. Economy
Chapter 1 Market
Definition A regular gathering of people for the purchase and sale of provisions, livestock and commodities. Sentence I go to the market at least once or twice a week to buy groceries. Connection 1. Economy 2. Microeconomics
Chapter 1 Incentive
Definition A thing that motivates or encourages one to do something. Sentence My parents incentive for making me do homework when I was younger was free time after I finished. Connection 1. Economics 2. Finances
Chapter 1 No-free-lunch principle
Definition Also known as the scarcity-forces-trade off-principle. Sentence The no free lunch principle does not exist in my book because I am registered for free lunch. Connection 1. Scarcity-forces-trade off-principle 2. Scarcity
Chapter 1 Benefits
Definition An advantage or profit gained from something. Sentence The benefits of becoming a teacher is an eventual retirement fund that is worth it in the end. Connection 1. Incentives 2. Economics
Chapter 1 Adam Smith, The Wealth of Nations
Definition An economist in the 18th century. Published a book tilted, Inquiry into the Nature and Causes of the Wealth of Nations. In the book, Smith analyzes the relationship between work and production of a nation's wealth. Sentence An important economist during the 18th century documents the state of the economy through the book tilted The Wealth of Nations. Connection 1. Smith was considered "The Father of Capitalism" or "Father of Economics" for his work. 2. The Wealth of Nation depicts Smiths knowledge on the economy at the time, setting a basis for the future economy.
Chapter 1 Trade-off
Definition Balance achieved between two desirable but incompatible features; a compromise. Sentence I made a trade-off to finish all my homework rather than sleeping early. Connection 1. Logistics 2. Scarcity
Chapter 1 future-consequences-count principle
Definition Decisions made today have consequences not only for today but also in the future. Sentence I'm scared of the future consequences count principle and don't think about it too often as I don't want to make a bad mistake in the future. Connection 1. Macroeconomics 2. Cost-versus-benefits-principle
Chapter 1 thinking-at-the-margin principle
Definition Let the past go and to think forward to the next hour, day, year, or dollar that you expend in time or money. You can't change the past, but you can change what yo do next. Sentence Rather than dwelling on the past, one must think at the margin to plan the future. Connection 1. Margins 2. Future
Chapter 1 Scarcity-forces-trade off-principle
Definition Limited resources force people to make choice and trade offs when they choose. Sentence The scarcity forces traded off principle is used during desperate times. Connection 1. Scarcity 2. Trade-Off
Chapter 1 Macroeconomics
Definition Looks at the decisions of countries and governments. Sentence The macroeconomics of the US right now seems to be declining due to the COVID-19. Connection 1. Economics 2. Investors
Chapter 1 Scarcity
Definition Low or in short supply; shortage. Sentence At the beginning of the COVID-19 outbreak, toilet paper was in scarcity. Connection 1. The coronavirus situation caused a lot of normal necessities to become scarce. 2. Competition
Chapter 1 Microeconomics
Definition Microeconomics is the study of individuals and business decisions. Sentence There are many businesses that deal with microeconomics in the US. Connection 1. Economics 2. Individualism
Chapter 1 law of unintended consequences
Definition Outcomes of a purposeful action that are not intended or foreseen. Sentence The law of unintended consequences refers to how economic decisions may not have the outcomes that have been expected. Connection 1. Economics 2. Future-consequences-count principle
Chapter 1 Normative Economics
Definition Perspective on economics that reflects normal (opinions) judgments toward economic development, investment projects, statements, and scenarios. Sentence Normative economics aim to determine what should happen or what could happen. Connections 1. Positive Economics 2. Judgement, Opinion, Predictions
Chapter 1 Cost-Benefit Analysis
Definition Procedure for estimating all costs involved and possible profits to be derived from a business opportunity or proposal. Sentence Tesla used the cost-benefit analysis in one of their many ways to determine whether or not a new car would be developed. Connection 1. Positive Economics 2. Economy
Chapter 1 Economic Enigmas
Definition Puzzles or riddles that might be explained through an economic analysis. Sentence An economic enigma that I've yet to find out is how I lost my $20 at the roller rink one day. Connection 1. Cost-Benefit Analysis 2. Incentives
Chapter 1 Economic Model
Definition Reality that allows us to observe, understand, and make predictions about economic behavior. Sentence The economic model of the US from what I observe has been on the decline. Connection 1. Economy 2. Economics
Chapter 1 Rational Behavior Model
Definition Refers to a decision-making process that is based on making choices that result in the optimal level of benefit or utility for an individual. Sentence If I chose a major that I enjoy rather than a high salary, I would have rational behavior. Connection 1. future-consequences-count principle 2. variable
Chapter 1 Marginal Benefit
Definition The additional benefit arising from a unit increase in a particular activity. Sentence Companies that offer additional incentives in their sales profit from marginal benefits. Connection 1. Incentives 2. Benefits
Chapter 1 Positive Economics
Definition The branch of economic analysis that describes the way the economy actually works. Sentence Positive economics touches on the serious matter of economy rather than just assumptions. Connection 1. Normative Economics 2. Data, Facts, Associated Figures
Chapter 1 Economics
Definition The branch of knowledge concerned with the production, consumption, and transfer of wealth. Sentence I am learning economics in school this year. Connection 1. Taxes 2. Production distribution and consumption
Chapter 1 Marginal Cost
Definition The cost added by producing one additional unit of a product or service. Sentence The marginal cost of electricity is the more accurate assessment of economy. Connection 1. Margins 2. Costs
Chapter 1 Cost-versus-benefits-principle
Definition The cost of providing financial information in the financial statements must not outweigh the benefit of that information to the users. Sentence Any type of business must keep in mind of the cost versus benefits principle to make a successful business. Connection 1. Costs 2. Benefits
Chapter 1 Resource (Factors of Production)
Definition The factors of production are resources that are the building blocks of the economy; they are what people use to produce goods and services: land, labor, capital, and entrepreneurship. Sentence We are depleting more and more of our natural resources every year. Resource 1. Exponential Growth 2. Exponential Decay
Chapter 1 Invisible Hand
Definition The unknown market force that helps the demand and supply of goods in a free market that help it maintain automatic stability. Sentence The invisible hand are typically companies that monopoly certain goods. Connection 1. Microeconomics 2. Economics
Chapter 1 Economy
Definition The wealth and resources of a country or region, especially in terms of the production and consumption of goods and services. Sentence Due to COVID-19, the current economy of the US has been declining. Connection 1. Finances 2. Exponential Growth/Decline
Chapter 1 trade-makes-people-better-off-principle
Definition Trade allows each person to specialize at what he or she does best, whether it's farming, sewing, or home building. Sentence Trade makes people better off principle heavily affects our daily lives. Connection 1. Trade off 2.Positive Economics
Chapter 1 Scientific Method
Definition a method of procedure that has characterized natural science consisting in systematic observation, measurement, and experiment, and the formulation, testing, and modification of hypotheses. Sentence We use the scientific method in every type of science or basically in everyday life. Connection 1. Resources 2. Law of unintended consequences
Chapter 1 markets-coordinate-trade principle
Definition the idea that markets are usually the best way to coordinate exchanges between buyers and sellers: markets are the middle person between two sales. Sentence The markets coordinate trade principle is used without many people knowing as markets are often the middle group that is responsible for receiving goods and selling goods. Connection 1. Markets 2. Trade offs
Chapter 1 Costs
Definition A amount that has to be paid or spent to buy or obtain something. Sentence How much do those shoes cost? Connection 1. Economics 2. Trade-Off