Flashcard Set Preview
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| 1 |
What is scarcity?
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When there is not enough to go around so we have to figure out some way to ration our scarce...
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| 2 |
What is rationality?
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When you are using a consistent method to make decisions. We generally believe your method...
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| 3 |
What is "marginal analysis"?
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You make decisions one step at a time, so that you consider only costs and benefits that occur...
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What are sunk costs?
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Costs you cannot change by making a new decision. You are stuck with these costs regardless...
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| 5 |
What is opportunity cost?
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What you sacrifice when you make a decision. You can only count the value of your next best...
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| 6 |
What are incentives?
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When we can influence someone's decision by offering them incentives and disincentives to change...
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What are externalities?
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When your consumption or production decision impacts those around you and you ignore these...
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| 8 |
What is economic surplus?
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The way economists measure the gain consumers and producers and society earn when decisions...
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| 9 |
What is a positive statement?
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Positive statements are potentially testable and potentially provable.
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| 10 |
What is a normative statement?
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Normative statements are more generally subjective value statements. Look for words without...
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| 11 |
What is "voting with dollars"?
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In the market system, what gets produced and who gets what is produced depends on how much...
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| 12 |
What are economic models?
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A use of simplifying assumptions; with the goal of making good predictions.
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| 13 |
What is economic efficiency or allocation efficiency?
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Economic efficiency or allocation efficiency requires the best use of scarce resources; we...
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| 14 |
What is a market failure?
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When markets fail to give us the best allocation of scarce resources resulting in less economic...
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