1Positive Statement
A statement that can be tested and validated; it describes "what is"
2Normative Statement
An opinion that cannot be tested or validated; it describes "what ought to be"
3Ceteris Paribus
"Other things being equal" Everything should be constant besides the changing independent variable
4Endogenous Factors
The variables that can be controlled for in a model
5Exogenous Factors
All variables that cannot be controlled for in a model
6Production Possibilities Frontier
A model that illustrates the combinations of outputs that a society can produce if all its resources are being used efficiently
7Law of Increasing Opportunity Cost
States that the opportunity cost of producing a good rises as a society produces more of it
8Specialization
The limiting of one's work to a particular area
9Absolute Advantage
Refers to the ability of one producer to make more than another producer with the same quantity of resources
10Consumer Goods
Produced for present consumption
11Capital Goods
Help produce other valuable goods and services in the future
12Investment
The process of using resources to create or buy new capital