Unit 1.1 - 1.3 Macro Vocab Quiz Notes

Microeconomics

Study of small economic units, such as individuals, firms, and markets

Macroeconomics

Study of the large economy as a whole or economic aggregates

Positive statement

What is = Based on facts, Avoids value judgments

Normative Statement

What ought to be = Includes value Judgments

Economics

Study of how individuals and societies deal with Scarcity. (Social Science concerned with efficient use of scarce resources to achieve maximum satisfaction of economic wants.)

Scarcity

Unlimited wants but limited resources (unable to have everything we desire)

Marginal Analysis

Marginal = additional; making decisions based on increments; (You will continue to do something as long as the marginal benefit is greater than the marginal cost)

Trade-offs

ALL the alternatives that we give up when we make a choice

Opportunity Cost

Most desirable alternative given up when you make a choice; Next best thing

Utility

Satisfaction

Allocate

Distribute

Price

Amount Buyer (consumer) pays

Cost

Amount seller pays to produce a good

Consumer goods

Created for direct consumption

Capital goods

Created for indirect consumption

Physical capital

Any human-made resources that is used to create other goods and services

Human capital

Any skill or knowledge gained by a worker through education and experience

Productivity

A measure of efficiency that shows the number of outputs per unit of input

Production Possibilities Curve (PPC)

A model that shows alternative ways that an economy can use its scarce resources; Demonstrates scarcity, trade-offs, opportunity costs, and efficiency

Inefficient/Unemployment

Inside the curve; Not using all resources; Employees are not working on task

Unattainable/Impossible

Outside the curve; Can't have enough stuff to work with; Not enough resources

Efficient

On the curve; Exact resources; Enough resources to use

Constant opportunity cost

Resources are easily adaptable for producing either good; In straight line (not common)

Law of increasing opportunity costs

As you produce more of