ECON 102 - Chapter 1

This set of flashcards covers key concepts discussed in the Principles of Macroeconomics lecture, focusing on definitions and distinctions within economic theory.

Economics

A social science that studies how humans and societies organize themselves to make choices about scarce resources to produce goods and services.

Scarcity

The limited nature of resources; not enough resources to produce everything that everybody wants.

Opportunity Cost

The value of the next-best alternative that is given up when making a choice.

Macroeconomics

The branch of economics that studies the behavior and performance of an economy as a whole (e.g., unemployment, inflation, government policies).

Microeconomics

The branch of economics that deals with individual and business decisions regarding the allocation of resources and prices of goods and services.

Positive Statement

A statement that can be tested and validated by empirical data.

Normative Statement

A statement based on opinions, beliefs, or values that cannot be tested or validated with data.

Productive Efficiency

Producing goods at the minimum cost of production.

Allocative Efficiency

Producing the right quantity of the right good to satisfy consumer demand.

Production Possibilities Curve

A graphical representation showing the maximum output combinations of two goods that can be produced with available resources and technology.

Factors of Production

Resources used in the production of goods and services, typically including land, labor, capital, and enterprise.

Voluntary Trade

Trade that benefits both parties involved, leading to greater overall efficiency.

Economic Goals of Society

Objectives like improved living standards, economic growth, full employment, stable prices, and equitable income distribution.