Economics: Basic Terminology

Ceteris Paribus

________: in an experiment, everything but the quality being observed must remain constant.

Microeconomics

________: the study of economics at the level of the individual- the small details.

Scarcity

________: you can not get all you want at no cost or zero price.

Macroeconomics

________: the study of the economy as a whole (aggregate)- the big picture.

Free good

________: a good for which there is no scarcity.

Economic good

________: a good which there is scarcity.

Economic bad

________: any item which people would be willing to pay less for.

Normative analysis

________: research which involves opinions, or tells what should be.

Economics

the study of how people make decisions

The basic economic problem

there are limited resources but unlimited wants

Scarcity

you cannot get all you want at no cost or zero price

Economic good

a good which there is scarcity

Free good

a good for which there is no scarcity

Economic bad

any item which people would be willing to pay less for

4 economic resources

labor (paid in wages), capital (paid in interest), land (paid in rent), and entrepreneurship (paid in profit)

Rational self-interest

people will choose what is in their best interest, or choose whatever brings them the most benefit

Positive analysis

research or analysis based on concrete fact

Normative analysis

research which involves opinions, or tells what should be

Fallacy of composition

"something that is good for one is good for all"

Association as causation

"one event causes the other if they are related"

Ceteris Paribus

in an experiment, everything but the quality being observed must remain constant