Introduction to Economics

These flashcards cover key terms and concepts introduced in the lecture about economics, including definitions, types of statements, and important relationships in economic analysis.

Scarcity

The inability to satisfy all wants due to limited resources.

Incentive

A reward that encourages, or a penalty that discourages, a certain action.

Microeconomics

The study of the choices made by individuals and businesses and how they interact in markets.

Macroeconomics

The study of the effects on the national and global economy from individual, business, and government choices.

Factors of Production

The resources used to produce goods and services, categorized as land, labor, capital, and entrepreneurship.

Opportunity Cost

The highest-valued alternative that is given up in order to choose something else.

Marginal Benefit

The additional benefit received from an incremental increase in an activity.

Marginal Cost

The additional cost incurred from an incremental increase in an activity.

Positive Statement

A statement that can be tested and validated against facts.

Normative Statement

A statement that expresses a value judgment and cannot be tested.

Ceteris Paribus

A Latin phrase meaning 'all other things being equal,' used to isolate the effect of one variable by holding others constant.

Fallacy of Composition

The logical error of assuming that what is true for a part is also true for the whole.

Post Hoc Fallacy

The erroneous belief that one event causes another simply because the first event occurred before the second.

Graph

A visual representation of the relationship between two variables.

Slope

The rate at which one variable changes in relation to another, indicating the direction and steepness of a line on a graph.

Positive Relationship

A relationship where two variables move in the same direction.

Negative Relationship

A relationship where two variables move in opposite directions.

Linear Relationship

A relationship that can be graphically represented by a straight line.

Non-linear Relationship

A relationship that cannot be accurately represented by a straight line, often showing curves on a graph.