ECON FINAL

Economics

The study of purposeful (goal oriented)) human behavior

cultural mandate

God’s directive to dominate the earth

positive statements (used in econ)

what is

normative statements

what ought to be

skepticism

attempts to render doubtful every position

relativism

truth and falsity are product of differing convention and frameworks

empiricism

we have no source of knowledge other than sensory experience

apriorism

knowledge is independent of experience

Christian apriorism

mental categories that are implanted in us by God

praxeology

studies preferences ;denotes our preferred method of completing everyday tasks or our approach to solving problems

human action

Ends

the purpose for acting

means

the things used to achieve ends

ideas

what you apply means to, to achieve an end

rational

purposeful behavior

scarcity

ends outnumber means

scarce

something that is both desirable and in limited supply

rare

something that is in limited supply, but which lacks desirability

ex ante

before the fact

ex post

after the fact

positive economics

the branch of economic analysis that describes the way the economy actually works

oppurtunity cost

the value of the alternative that must be forgone as the result of choosing to achieve a certain end

economize

to try to achieve the ends with the least means

subjective value

the worth of a good or service as determined by its usefulness to the buyer

economic good

the means used to satisfy an end

consumer good

directly serviceable means for satisfying ends

producer good

indirectly serviceable means for satisfying ends

production structure

a visualization of the relationship between consumer goods and producer goods

marginal utility

the utility one receives from the marginal unit of a good

the law of marginal utility

there is an inverse relationship between the quantity of a good and the marginal utility of that good

land

all natural resources used to produce goods and services

labor

human effort directed toward producing goods and services

capital goods

goods that are used in producing other goods rather than being bought by consumers

marginal unit

the next unit gained or given up

utility

the capacity to be useful and provide satisfaction

the law of diminishing returns (the law of too many cooks in the kitchen)

when all other inputs are held constant the increase in output attributable to the variable input eventually falls

labor theory of value

the belief that all value in produced goods is derived from labor

discipline of repeated dealings

if you don’t deal with me today as I expect ill refuse to deal with you tomorrow

direct exchange

the trading of goods for other goods or services without the use of money

involuntary exchange

interaction lacking consent

voluntary exchange

interaction based on consent

protectionism

the practice of shielding a country’s domestic industries from foreign competition by taxing them

paternalism

people are mistaken abut their own best interests

ownership

necessary for exchange

absolute advantage

when ones party is better at producing a good than another party

autarky

economic self sufficiency

division of labor

different people specializing at producing different goods

specialization

focusing of a specific task to the exclusion of ither possible tasks

private property

property owned by an individual

doux commerce thesis

exchange cultivates the virtues that underpin free and prosperous societies

the capitalist peace

the idea that advanced capitalist societies do not choose to go to war against one another

exchangeability

permits economic goods to be allocated to their most highly valued users

excludability

the ability to prevent other users from consuming some piece of property

accountability

individuals bear the cost/reap the benefits of their actions

tragedy of the commons

individuals '“over consume” a good due to the lack of private property rights

private predation

burglary, looting, mugging ect.

public predation

takings, confiscating taxation, regulation, inflation, etc.

comparative advantage

the ability to produce a good at a lower opportunity cost than another producer

money

commonly accepted medium of exchange

economic calculation

producer comparing revenues/costs to determine weather profit/loss has been made

demand

relates different quantities of a good a buyer is willing to purchase at each price

maximum buying price

largest amount of money valued less than the relevant unit

demand curve

the law of demand

there is an inverse relationship between the hypothetical price of a good and the quantity of that good a person will buy ceteris paribus

ceteris paribus

all other things held constant

supply

related different qualities of a particular good an individual is willing and able to supply at very given price

min selling price

smallest amount of money valued more then relevant unit

the law of supply

there is a positive relationship between the price of a good and the quantity of the good, supplied ceteris paribus

most eager buyer

the person willing to pay the most for the good

most eager seller

the person willing to accept the lowest price for a good

supply curve

equilibrium price

the price at which there is no excess demand or excess supply

excess demand

quantity demanded>quantity supplied (shortage)

excess supply

quantity supplied>quantity demanded (surplus)

the law of one price

for any good there will (eventually) be only one market price which is paid and received ceteris paribus

arbitrage

attempting to profit by buying low and selling high

the role of prices

price allocate resources to their highest valued users

elasticity

a measure of sensitivity/responsiveness to change in prices

elastic demand

a situation in which consumer demand is sensititve to changes in price

inelastic demand

a situation in which an increase or a decrease in price will not significantly affect demand for the product

total expenditure

P*Q

increase in demand

demand curve shifts right

decrease in demand

demand curve shifts left

complements

goods used to jointly achieve some desired end

SUBSTITUTE

good consumed in place of some other good

increase in supply

curve shifts right

decrease in supply

curve shifts left

increase in consumer income

-willing and able to buy more at each price

- increase in demand

-demand curve shifts right

production

creation of value

consumption

destruction of value

saving

sacrificing present consumption

plain saving

storing up consumer goods so they can be consumed in the future

investment

the transfer of saved resources to lengthen the production structure

capitalist saving

sacrificing consumption to lengthen the production structure

time preference

the intensity of the preference for current over future consumption

positive time preference

humans always prefer present consumption to later consumption

duration of servicableness

the period of time for which a capital good continues yielding services

capitalist

individual who saves income/invest the formation of capital goods

entrepreneur

undertakes production by combining factors of production to produce a final product to sell for income

total revenue

price of unit times the quantity of the unit sold