ECO207 Chapter 1 - Limits, Alternatives, and Choices

aggregate

a collection of specific economic units treated as if they were one unit

capital

human-produced physical objects and intangible ideas that do not directly satisfy human wants but which to help produce goods and services that do satisfy human wants

entrepreneurial ability

the human resource that combines the other economic resources of land, labor, and capital to produce new products or make innovations in the production of existing products

investment

expenditures that increase the volume of physical capital and intangible ideas that help to produce goods and services; also known as economic investment

labor

any mental or physical exertion on the part of a human being that is used in the production of a good or service

land

in economics, refers to any and all natural resources that are used to produce goods and services

model

a useful simplification of reality; used in economics to make simplifying assumptions

normative economics

the part of economics involving value judgments about what the economy should be like; focused on which economic goals and policies should be implemented

opportunity cost

the amount of other products that must be forgone or sacrificed to produce a unit of a given product

“other-things-equal” assumption

the assumption that factors other than those being considered are held constant; also known as ceteris paribus

positive economics

the analysis of facts or data to establish scientific generalizations about economic behavior

scarcity

the limits placed on the amounts and types of goods/services available for consumption as a result of limited economic resources from which to produce output

utility

the want-satisfying power of a good or service; the satisfaction or pleasure a consumer obtains from the consumption of a good or service