Economics chapter 1

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what is the economic surplus of a plane ticket that cost $250 but you buy it online for $175

$75

the study of how people make choices under the conditions of scarcity and the results of those choices

Economics

the concentration on the performance of national economies and ways to improve upon their performance

Macro vs. Micro

focuses on choice made by individuals or groups in the context of individual markets

Micro vs. Macro

choosing to study for an exam until the extra benefit (improved score) equals the extra cost (mental fatigue) is an example of

applying the cost benefit principle

diving the total cost of n units of an activity by n reveals the

average cost

what is the logical implications of the scarcity principle

choices are made

extra cost and benefits of an activity are more important considerations than the total costs and benefits.

cost benefit principle

an action should be taken if the extra benefit is greater than or equal too the extra cost

cost-benefit principle

economic models are intended to generalize about patterns in

decision-making

someone who applies economic insights to everyday life

economic naturalist

the difference between the benefit gained and the cost incurred of taking an action

economic surplus

who does the scarcity principle apply too

everyone-consumers, firms, government, and nations

states that a person is more likely to do something if the benefit of doing that increases

incentive peinciple

the extra that results from an extra unit of an activity is called

marginal cost

why is the cost benefit model used by economist

most people follow it all the time

tell us how people should make the economic decisions

normative principles

what does rational decision making require

one to choose the actions that yield the largest economic surplus

opportunity cost is not the total value of all possible activities but....

only the value of the alternative you give up

what is an activity is the value of the next best thing alternative forgone

opportunity cost

tell us how people actually make the economic decisions

positive principles

is the government wanted to use the incentive principle to discourage people from smoking what would they do

raise the price in cigarettes along with the price of them

that with limited resources, having more of "this" means having less of "that"

scarcity principle

implies that a person cannot have or do anything, but must choose from among alternatives

scarcity principle implies....

dean decided to play golf rather than prepare for tomorrows exam in economics. what can you infer?

that the economic surplus from playing golf exceeded the surplus from studying

when a person decides to pursue an activity as long as the extra benefits is greater than or equal to the extra cost, that person is following

the cost benefit principle

what is the extra benefit that comes from an extra unit of activity is called

the marginal benefit of the activity

whether studying size of the US economy or the number of children a couple will choose to have is the concept that

wants are unlimited and resources are limited and a choice must be made


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