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THEORY: A scientifically verified, interrelated body of general principles, axioms, and assumptions that is used to explain and understand real world phenomena. Theories are the cornerstone of the scientific method. They generate the hypotheses that are verified against real world data, which is the day-to-day process of doing science. The construction and refinement of theories, accomplished through the hypothesis verification process, is also the basic goal of doing science.
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Lesson Contents
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Unit 1: The Concept |
Unit 2: Resources |
Unit 3: Opportunity Cost |
Unit 4: College Cost |
Unit 5: THE Problem |
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Scarcity
In this lesson you'll see why scarcity tends to make economists grumpy. You'll see that scarcity is a perpetual condition that exists because people have unlimited wants and needs, but limited resources. You'll also see how this scarcity problem underlies the common notion of cost, which is integral to the study of economics. The five units contained in this lesson provide a tour through the economic problem of scarcity. - The first unit, A Big Problem, examines the fundamental concept of scarcity -- the combination of limited resources and unlimited wants and needs -- that is virtually synonymous with the study of economics.
- The second unit, Resources, discusses the four basic categories of limited resources -- labor, capital, land, and entrepreneurship -- which produce the goods that are used to satisfy unlimited wants and needs.
- In the third unit, Opportunity Cost, we take a look at the notion of opportunity cost and see how it is related to the scarcity problem.
- We then turn out attention in the fourth unit, College Cost, to a simple example of the explicit and implicit costs of attending college.
- The fifth and final unit, THE Big Problem, in this lesson then ponders why scarcity is considered THE economic problem and provides a little insight into why economists are grumpy.
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MARGINAL REVENUE, PERFECT COMPETITION The change in total revenue resulting from a change in the quantity of output sold. Marginal revenue indicates how much extra revenue a perfectly competitive firm receives for selling an extra unit of output. It is found by dividing the change in total revenue by the change in the quantity of output. Marginal revenue is the slope of the total revenue curve and is one of two revenue concepts derived from total revenue. The other is average revenue. To maximize profit, a perfectly competitive firm equates marginal revenue and marginal cost.
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Parker Brothers, the folks who produce the Monopoly board game, prints more Monopoly money each year than real currency printed by the U.S. government.
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"We succeed in enterprises (that) demand the positive qualities we possess, but we excel in those (that) can also make use of our defects." -- Alexis de Tocqueville, Statesman
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NAFTA North America Free Trade Agreement
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