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Economics Chapter 1 Terms - Basic Principles of Economics

This set consists of important terms in Chapter 1 of Grade 12 Economics (university preparation)

Terms

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normative statement
which type of statement is this: Governments should provide affordable daycare for working parents
production possibilities curve
the illustration is based on the premise of full employment
opportunity cost
the cost of all that is lost from taking one course of action over another; the second best choice you give up in order to get your best choice
output
the products produced by using resources or inputs such as land, labour, or capital
conditional statement
which kind of statement is this, "If the price of cigarettes decreases, the quantity purchased will increase."
fallacy of composition
a mistaken belief that what is good for an individual is automatically good for everyone, or vise versa
analytical economics
another word for positive economics; the branch of economics that deals with facts and direct observation of the world
frontier
the curve on a production possibilities graph representing the maximum numbers of two items that can be produced with a given amount of resources
fallacy of composition
which fallacy is presented: If every Canadian worker received a 10 percent pay increase, the nation as a whole would be better off
social science
science, such as economics, history, and sociology, that studies some aspect of human behaviour
input
a productive resource such as land, labour, or capital used to produce an output
human behaviour and value systems
two things which greatly complicate studies in the social sciences
origin
as used in graphs, the point at which the vertical and horizontal axes meet
law of increasing relative cost
the increase in the relative cost of producing more of item A, measured by the numbers of another item, B, that could be produced with the same resources
effective
a particular use of resources that achieves a desired end, such as consumption
nemo
the Greek word for "to manage"
capital resource
which type of resource does seed belong to
policy economics
another word for normative economics; deals with value judgements
resources
all those elements used in the production of goods and services designated to meet our needs and wants
cause-and-effect fallacy
a mistaken belief that what occurs before some event is logically the cause of it
economy
a self-sustaining system in which many independent transactions (often triggered by self-interest) create distinct flows of money and products
economy
it involves a series of independent transactions motivated by economic goals
positive economics
another word for analytical economics, concerned with descriptive and conditional statements
post hoc fallacy or cause-and-effect fallacy
which fallacy is presented: Ali's marks improved after she broke up with Evan. He was not a good influence
scarcity
the fact that only a limited amount of resrouces is available to produce a limited number of goods and services to meet ralatively unlimited human wants
relative cost
the opportunity cost involved in a production possibilities curve
wants
the desire for goods or services not essential to sustain human life, such as stylish clothing, exotic foods, jewellery, or travel in the tropics
goods
the concrete, physical products we manufacture, such as furniture and automobiles
economics
the study of the way society makes decisions about the use of scarce resources
observation
the first basic component of the scientific method
normative statement
which type of statement is this: it requires political decision making focused on the common good or the collectie well-being of a society
law of increasing returns to scale
the increase in the rate of extra outputs produced when all inputs used in production are increased and no inputs are held constant
normative statement
which type of statement is this: cannot be confirmed or refuted solely by reference to facts
post hoc fallacy
another name for cause-and-effect fallacy
fallacy of single causation
which fallacy does it contain: stock market crash caused the Great Depression
fallacy of composition
which fallacy is presented: Jasna found the work experience she got through her school's co-op to be of great personal benefit, Co-op should be a compulsory requirement for all secondary school students
economy
it consists of interdependent people, groups, and institutions, each performing specialized roles
fallacy of single causation
which fallacy is presented: An economic crisis in Japan caused the 1998 decline of the Canadian dollar in international money markets
economize
to use limited resources efficiently in production; use resources wisely
production possibilities curve
this graph is based on the premise of fixed technology and resource
trade-off
the increased production of one good can be achieved only by sacrificing a sufficient quantity of the alternative product
descriptive statement
which type of statement is this: factual observations that can be verified or confirmed
economy
it is dynamic or subject to movements and exchanges
fallacy of single causation
which fallacy is presented: Former prime minister Brian Mulroney was responsible for the economic recession of 1990.
descriptive statement
a statement which portrays things as they are in the present or have been in the past
relative cost
the cost of producing one item, A, expressed in terms of the number of another item, B, which must be given up in order to produce A
descriptive statement
which kind of statement is this, "Automobile sales in Canada in this quarter are 7 percent higher than in the last quarter."
y-axis
as in graphs, the axis where price is plotted along
capital resources
goods used in the production of other goods and services, such as factories, machines, and tools
x-axis
as in graphs, the axis where quantity is plotted along
fallacy of single causation
a mistaken belief, based on oversimplification, that a particular event has one cause rather than several
oikonomia
the Greek word that refers to the science of household or estate management
fallacy of composition
which fallacy does free trade represent
economic goods
goods that are scarce and have economic values
capital goods
goods used in the production of other goods
data collection
the second basic component of the scientific method
production possibilities curve
a graphical representation of the production choices facing an economy
conditional statement
which type of statement is this: If income taxes are reduced, consumer spending will increase
Francis Bacon
the English scientist who first outlined the four basic components of the scientific method
fallacy
a hypothesis that has been proven false but is still accepted by many people because it appears to make sense
fallacy of composition
which fallacy is presented: What is good for General Motors is good for the Canadian economy
conditional statement
which type of statement is this: forecasts
law of diminishing returns
the eventual decline in the rate of extra outputs produced that occurs when one input used in production of the output is held constant and the others are increased
conditional statement
a forecast based on the careful analysis of economic behaviour
scientific method
a method of study used to make discoveries in natural science and social sciences
post hoc fallacy or cause-and-effect fallacy
which fallacy is presented: Victoria, British Columbia, has one of the highest death rates in the country, therefore, it must be unhealthy to live there
economy
a very complex or intricate system
knowledge of group behaviour and general tendencies
the two kinds useful information for decision makers
normative statement
a statement which expresses what a particular economicst or group of economists thinks should be the case, based on their value judgements; a statement that cannot be confirmed or refuted solely by reference to facts
natural resources
all the resources in nature that have value, such as land, minerals, fresh water, and forests
verification
the fourth basic component of the scientific method
inverse relationship
as in graphs, the relationship which the line illustrates a downward slope of the relationship between two variables
efficient
the use of a bare minimum of resources necessary to achieve a desired end, such as consumption
consumer goods
products and services that directly satisfy human wants
oikos
the Greek word for "household" or "family estate"
production possibilities curve
it illustrates the fundamental problem of scarcity
economy
it involves numerous transactions that create two circular flows (money moves in one direction while goods and services move in the opposite direction
services
the activities we engage in and sell to others, such as medical and retail services
free goods
goods that have no scarcity and exist in sufficient quantities to satisfy everyone's wants
oikos
the basic unit of classical Greek society; a large family estate or houshold, including land, crops, a house, family members, slaves, animals, and accumulated wealth
bowed-out or concave
the shape of a production possibilities curve representing the law of increasing relative cost
production possibilities curve
this model is based on the premise of only two products can be produced by this economy
human resources
also called labour, the human efforts used in the production of good and services
fallacy of single causation
which fallacy is presented: A multi car acident on the Trans-Canada Highway was caused by bad weather
agriculture
what the economy of Greece was based on
normative economics
another word for policy economics; the branch of economics that deals with value judgements about economic subjects rather than facts and observations
economics
the science of scarcity and choice
explanation
the third basic component of the scientific method
needs
basic human physical requirements necessary to sustain life, such as food, clothing, and shelter
Xenophon
a free citizen-soldier of Athens around 430 BCE; the father of economics who wrote the book Oeconomicus

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