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Economics
A social science focused on choosing among alternatives involving scarce resources to maximize satisfaction of human wants.
Macroeconomics
The study of economics from the viewpoint of the entire economy, including concepts like inflation and GDP.
Microeconomics
The study of economics from the viewpoint of individual sectors such as households and businesses.
Ceteris Paribus
A Latin phrase meaning "all things equal" or "all other things unchanged."
Positive Economics
Describes the economy as it is, avoiding value judgments and focusing on scientific statements.
Normative Economics
Involves value judgments about what the economy should be like and the desirability of policy options.
Adam Smith
Economist known for the concept of the "invisible hand," suggesting self-interest leads to societal benefits.
Rational Behavior
The assumption that human behavior reflects rational self-interest aimed at achieving maximum utility.
Marginalism
The economic perspective focused on analyzing the benefits and costs of changes in current conditions.
No Free Lunch
The principle that every choice involves a cost, and there are limits to resources.
Economic Goals
Widely accepted objectives in society, including economic growth, full employment, and price stability.
Opportunity Cost
The value of the best alternative that must be sacrificed to pursue a certain action.
Law of Diminishing Returns
The principle that adding more of a variable resource to a fixed resource will eventually decrease marginal product.
Comparative Advantage
The ability of a producer to produce a good at a lower opportunity cost than another producer.
Theoretical Economics
The systematic arrangement and interpretation of economic facts to make generalizations.
Economic Terminology
Terms like principles, laws, theories, and models refer to generalizations about economic behavior.
Generalization
Economic principles express tendencies of typical consumers or firms, acknowledging diversity in behavior.
Abstractions
Simplifications in economic models that highlight important connections while stripping away complexity.
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