Economics Private and Public Choice 13e Chapter 1
Ceteris Paribus
Latin for 'other things constant' used when the effect of one change is being described, recognizing that if other things changed they could affect the result
Rationing
allocating limited supply of a good or resource among people who would like to have it
Microeconomics
branch of economics that focuses on how human behavior affects the conduct of affairs within narrowly defined units, such as individual households or business firms
Economizing behavior
choosing the option that offers the greatest benefit at the least possible cost
Scientific Thinking
developing a theory from basic principles and testing it against events in the real world
Marginal
effects of change in a current situation
Fallacy of Composition
erroneous view that what is true for the individual (part) will be true for the group (whole)
Objective
fact based on observable phenomena that is not influenced by differences in personal opinion
Macroeconomics
focuses on how human behavior affects outcomes in highly aggregated markets, such as markets for labor or consumer products
Scarcity
fundamental concept of economics that indicated that there is less of a good freely available from nature than people would like
Opportunity cost
highest valued alternative that must be sacrificed as a result of choosing an option
Capital
human made resources like tools, equipment, and structures used to produce other goods and services. Enhance our ability to produce in the future
Secondary effects
indirect impact of event or policy that is not immediately observable, unintended and overlooked
Resource
input used to produce economic goods. Land, labor, skills, natural resources, human made tools, equipment
Normative economics
judgments about 'what ought to be' in economic matters. Cannot be proven false because they are based on value judgments
Subjective
opinion based on personal preferences and value judgments
Positive economics
scientific study of 'what is' among economic relationships
Economic theory
set of definitions, postulates, and principles assembled in a manner that makes clear the 'cause and effect' relationships
Utility
subjective benefit or satisfaction a person expects from a choice or course of action
Choice
the act of selecting among alternatives