Economics Glossary: Terms and Definitions, Quizzes of Microeconomics

Download Economics Glossary: Terms and Definitions and more Quizzes Microeconomics in PDF only on Docsity! TERM 1 efficient markets DEFINITION 1 markets where any profit opportunities are eliminated almost instantly. TERM 2 marginalism DEFINITION 2 the process of analyzing the additional or imcremental costs or benefits arising from a choice decision. TERM 3 positive economics DEFINITION 3 an approach to economics that seeks to understand behavior and the operation of systems without making judgments. It describes what exists and how it works TERM 4 normative economics DEFINITION 4 an approach to economics that analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action. TERM 5 descriptive economics DEFINITION 5 the compilation of data that describe phenomena and facts. TERM 6 model DEFINITION 6 a formal statement of a theory, usually mathematical statement of a presumed relationship between two or more variables. TERM 7 variable DEFINITION 7 a measure that can change from time to time or from observation to observation. TERM 8 ockham's razor DEFINITION 8 the principle that irrelevant detail should be cut away. TERM 9 ceteris paribus DEFINITION 9 a device used to isolate the impact of one single factor. TERM 10 fallacy of composition DEFINITION 10 the erroneous belief that what is true for a part is true for the whole. TERM 21 comparative advantage DEFINITION 21 a producer has a comparative advantage over another in the production of a good or service if he or she can produce that product at a lower opportunity cost. TERM 22 consumer goods DEFINITION 22 goods produced for present consumption TERM 23 investment DEFINITION 23 the process of using resources to produce new capital. TERM 24 production possibility frontier (ppf) DEFINITION 24 a graph that shows all the combos of goods and services that can be produced if all of society's resources are used efficiently. TERM 25 economic growth DEFINITION 25 an increase in the total output of an economy.it occurs when a society acquires new resources or when it learns to produce more using existing resources. TERM 26 command economy DEFINITION 26 an economy in which a central government either directly or indirectly sets output targets, incomes, and prices. TERM 27 laissez-faire economy DEFINITION 27 from french meaning "allow them to do." an individual economy in which individual people and firms pursue their own self-interest without any central direction or regulation. TERM 28 consumer sovereignty DEFINITION 28 the idea that consumers ultimately dictate what will be produced by choosing what to purchase. TERM 29 free enterprise DEFINITION 29 the freedom of individuals to start and operate private businesses in search of profits. TERM 30 product or output markets DEFINITION 30 the markets in which goods and services are exchanged. TERM 31 input or factor markets DEFINITION 31 the markets in which the resources used to produce goods and services are exchanged. TERM 32 labor market DEFINITION 32 the input/factor market in which households supply work for wages to firms that demand labor. TERM 33 capital market DEFINITION 33 the input/factor market in which households supply their savings, for interest or for claims to future profits, to firms that demand funds to buy capital goods. TERM 34 land market DEFINITION 34 the input/factor market in which households supply land or other real property in exchange for rent. TERM 35 quantity demanded DEFINITION 35 the amount of a product that a household would buy in a given period if it could buy all it wanted at the current market price.