Economics
Chapter 1--The Nature and Method of Economics
Terms to Identify:
• economics
• economic perspective
• opportunity cost
• utility
• marginal analysis
• scientific method
• economic principle
• other-things-equal assumption
• macroeconomics
• aggregate
• microeconomics
• positive economics
• normative economics
• economizing problem
• budget line
• economic resources
• land
• labor
• capital
• investment
• entrepreneurial ability
• factors of production
• consumer goods
• capital goods
• production possibilities curve
• law of increasing opportunity costs
• economic growth
You should be able to:
Write a formal definition of economics
Describe the three key features of an economic perspective
Give examples of the application of an economic perspective
Give two good reasons for studying economics
Identify the elements of the scientific method
Describe theoretical economics
Distinguish among hypotheses, theories, principles, laws, and models
Explain what an economic principle is and how economic principles are obtained
Discuss how economic principles are generalizations and abstractions
Explain what the “other things equal” (ceteris paribus) assumption is and why this
assumption is employed in economics
Define policy economics
List three steps in economic policymaking
Identify eight economic goals widely accepted in the United States and many other
nations
Discuss the conflicting or complementary nature of economic goals
Distinguish between macroeconomics microeconomics
Give examples of positive and normative economics
Identify the five pitfalls to objective thinking when given examples
Be able to do: