1.7 Key Terms
Key Terms
A factor of production that has been produced for use in the production of other goods and services. Office buildings, machinery, and tools are examples of capital.
Mean that one alternative is selected over another. Selecting among alternatives involves three ideas central to economics: scarcity, choice, and opportunity cost.
The government decides what goods and services will be produced and what prices it will charge for them. The government decides what methods of production to use and sets wages for workers. The government provides many necessities like healthcare and education for free.
This is a social science that examines how people choose among the alternatives available to them. It is social because it involves people and their behaviour. It is a science because it uses, as much as possible, a scientific approach in its investigation of choices.
is an assertion of a relationship between two or more variables that could be proven to be false.
This is the human effort that can be applied to the production of goods and services. People who are employed—or are available to be—are considered part of the labour available to the economy.
Looks at the economy as a whole. Microeconomics and macroeconomics are not separate subjects, but rather complementary perspectives on the overall subject of the economy.
This is the process of breaking down a decision into a series of ‘yes or no’ decisions. More formally, it is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. If benefits > costs, this is the right choice for a rational thinker.
A market is an institution that brings together buyers and sellers of goods or services, who may be either individuals or businesses. The New York Stock Exchange is a prime example of a market that brings buyers and sellers together.
Focuses on the actions of individual agents within the economy, like households, workers, and businesses.
Most economies in the real world are mixed. They combine elements of command and market systems. The Canadian economy is positioned toward the market-oriented end of the spectrum.
This is one that makes a value judgment. Such a judgment is the opinion of the speaker; no one can “prove” that the statement is or is not correct.
A statement of fact or a hypothesis. (1.5)
This means that human wants for goods, services and resources exceed what is available. Because of scarcity, we need to make choices.
Goods and services are produced using the factors of production available to the economy.
is a simplified representation of how two or more variables interact with each other.
