1. Social Science and Economic Concepts

Social Science

Uses scientific methods to explain behavior and relationships in society.

Hypothesis

Tentative description of observed phenomena.

Harder Theories

Theories from natural science that withstand tests.

Softer Theories

Social science theories allowing exceptions to central predictions.

Consumption

Process of satisfying consumer needs and wants.

Economic Welfare/Utility

Happiness from consumption or quality of life factors.

Goods

Tangible products like food and cars.

Services

Intangible products like education and healthcare.

Needs

Minimum requirements for human survival.

Wants

Desires for goods and services, infinite in nature.

Economic Activity

Production of goods and services to satisfy needs and wants.

Factors of Production

Land, labor, capital, and entrepreneurship used in production.

Environmental Resources

Natural and abstract resources within the environment.

Factor Income

Payment to owners for use of production factors.

Scarce Resources

Limited production inputs requiring choices in use.

Inputs

Factors of production or raw materials used in production.

Production

Transformation of resources into final consumer form.

Output

Combined goods and services produced.

Economic Problem

Allocation of resources due to infinite wants and scarce resources.

Choice

Economic decisions involving alternative uses of scarce resources.

Trade-Off

Choosing between conflicting objectives due to limited resources.

Economic Agents

Decision makers affecting resource allocation.

Economy

System solving economic problems of production, allocation, and consumption.

Free-Market-Economy

System relying on market forces for resource allocation.

Opportunity Cost

Benefit forgone of the next best alternative.

Economic Goods

Goods with opportunity cost due to scarcity.

Free Goods

Unlimited supply goods with no opportunity cost.

Production Possibility Frontiers (PPF)

Curve showing maximum potential output given fixed resources and technology.

Capital Goods

Assets used to produce other goods, not for consumption.

Consumer Goods

Goods produced for consumption.

Productive Efficiency

Full employment of resources producing at lowest costs.

Allocative Efficiency

Best combination of goods and services considering consumer preferences.

Asymmetric Growth

Economic growth due to increased productivity in one sector.

Normative Statements

Opinions requiring value judgments, not scientifically testable.

Positive Statements

Objective statements of fact scientifically testable.