Chapter 1 Key Terms McConnell and Brue 14th Edition
economics
The social science concerned with the efficient use of limited or scarce resources to achieve maximum satisfaction on human material wants.
economic perspective
A viewpoint which envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions.
marginal analysis
The comparison of marginal (“extra” or “additional”) benefits and marginal costs usually for decision making.
theoretical economics
The process of deriving principles.
principles
Generalizations about the way individuals and institutions behave; meaningful statements about economic behavior or the economy.
induction
A method of reasoning which proceeds from facts to generalization.
deduction
Reasoning from assumptions to conclusions; a method of reasoning which first develops a hypothesis (an assumption) and then tests the hypothesis with economic facts.
generalization
A general statement, law, principle, or proposition.
"other things being equal" assumption
(Or, ceteris paribus) The assumption that all other variables except those under immediate consideration are held constant for a particular analysis.
policy economics
The formulation of courses of action to bring about desired economic outcomes or to prevent undesired occurrences.
tradeoffs
The sacrifice of some or all of one economic goal good or service to achieve some other goal good or service.
macroeconomics
The part of economics concerned with the economy as a whole; with such major aggregates as the household business and governmental sectors; and with measures of the total economy.
aggregate
A collection of specific economic units treated as if they were one unit. For example, we might use the term, consumers to refer to an aggregate of all consumers in the US.
microeconomics
The part of economics concerned with such individual units as industries firms and households; and with individual markets particular prices and specific goods and services.
positive economics
The analysis of facts or data to establish scientific generalizations about economic behavior.
normative economics
That part of economics involving value judgments about what the economy should be like; concerned with identifying economic goals and promoting them via public policies.
fallacy of composition
Incorrectly reasoning that what is true for the individual (or part) is necessarily true for the group (or whole).
"after this therefore because of this" fallacy
(Or, Post hoc, ergo propter hoc) The fallacy that because B follows A, that B must be caused by A.