| attainable | Levels of production that are possible with the given resources.
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| causation | A change in one variable makes another variable change.
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| direct correlation | A higher level of one variable is associated with a higher level of the other variable.
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| economics | The study of the allocation and use of scarce resources to satisfy unlimited human wants.
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| fallacy of composition | The mistake in logic that suggests that the total economic impact of something is always and simply equal to the sum of the individual parts.
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| inverse correlation | A higher level of one variable is associated with a lower level of the other.
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| marginal benefit | The increase in the benefit that results from an action.
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| marginal cost (MC) | The increase in cost associated with increasing production by one unit.
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| model | A simplification of the real world that can be manipulated to explain the real world.
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| net benefit | The difference between all benefits and all costs.
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| normative analysis | A form of analysis that seeks to understand the way things should be.
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| opportunity cost | The forgone alternative of the choice made.
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| optimization assumption | An assumption that suggests that the person in question is trying to maximize some objective.
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| positive analysis | A form of analysis that seeks to understand the way things are and why they are that way.
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| production possibilities frontier | A graph which relates the amounts of different goods that can be produced in a fully employed society.
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| resource | Anything that is consumed directly or used to make things that will ultimately be consumed.
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| scarce | Not freely available and lacking a finite source.
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| simplifying assumption | An assumption that may, on its face, be silly but allows for a clear explanation.
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| unattainable | Levels of production that are not possible with the given resources.
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| unemployment | A situation that occurs when resources are not being fully utilized.
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2003 McGraw-Hill Higher Education