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scarcity
having unlimited wants but limited resources
textbook definition of economics
social science concerned with the efficient use of scarce resources to achieve maximum satisfaction of economic wants
microeconomics
study of small economic units such as individuals, firms, and markets
macroeconomics
study of the large economy as a whole or economic aggregates
positive statements
based on facts; avoids value judgments (what is)
normative statements
includes value judgments (what ought to be)
marginal analysis
making decisions based on increments
trade-offs
all the alternatives that we give up when we make a choice
opportunity costs
the most desirable alternative given up when you make a choice
utility
satisfaction
marginal
additional
allocate
distribute
price
the amount the buyer (or consumer) pays
cost
the amount the seller pays to produce a good
consumer goods
created for direct consumption
capital goods
created for indirect consumption
physical capital
any human-made resource that is used to create other goods and services
human capital
any skills or knowledge gained by a worker through education and experience
productivity
a measure of efficiency that shows the number of outputs per unit of input
production possibilities curve (PPC, frontier)
a model that shows alternative ways that an economy can use its scarce resources
opportunity cost
the benefit missed out when choosing an alternative; the next best thing
absolute advantage
the producer that can produce the most output or requires the least amount of inputs (resources)
comparative advantage
the producer with the lowest opportunity cost
output questions
the amount of inputs, like time, workers, or other resources, are the same for both countries. only the output of each country is different
input questions
the amount of output, like cars, planes, or corn, are the same for both countries. only the inputs for each country are different
terms of trade
agreed upon conditions that benefit both countries
Note 
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