Macro Ch 1

marginal principle

Decisions about quantities are best made incrementally. You should break "how many" questions into a series of smaller, or marginal decisions, weighing marginal benefits and marginal costs.

The idea of _____ benefiting from a voluntary exchange lies at the heart of all economic transactions.

both sides

How is an increase in productivity represented on the graph of a production possibility frontier?

by the entire frontier being pushed outward

When someone weighs the pros and cons of a particular decision, they are taking into account the _____ principle.

cost-benefit

cost benefit principle

costs and benefits are the incentives that shape decisions, pursue only if benefits exceed costs.

economics is a study of

decisions, gives us a framework lens to understand decisions; a way of thinking

___________ is a common measuring stick that allows different people to compare a wide variety of costs and benefits, taking into account both financial and nonfinancial aspects of a decision.

money

The _____ forces people to recall that whenever they choose to do something, they are implicitly choosing not to do something else.

opportunity cost principle

The ___________ rule is the most powerful application of the marginal principle.

rational

Amancio is going into his fourth year of school when he is offered a prestigious position at a software company. Instead of applying the opportunity cost principle to see if he should quit school and take the job, he decides to stay in school, because he has already spent so much time and money on furthering his education. Amancio's hasty decision has been negatively affected by:

sunk costs

economics

the study of how individuals/societies allocate limimtes resources to satisy unlimited wants