Chapter 1 Flashcards
The factories, machines, tools, and inventories in an economy.
capital
If the additional benefits (correctly measured) are greater than the additional costs incurred (correctly measured), go for it. If the additional costs are greater than the additional benefits, do not do it.
decision-making rule
Labor, capital, and natural resources that can be used to produce goods and services
economic resources
Costs that do not change as a result of a decision
fixed costs
The study of the economy as a whole. Growth of economy-wide production, changes in unemployment, and rates of inflation are the most common concerns
macroeconomics
The increase in benefits resulting from an action, or the increase in benefits resulting from producing one more unit of output
marginal benefit
The increase in costs resulting from an action, or the increase in costs resulting from producing one more unit of output
marginal cost
Methods through which buyers and sellers come together and determine the prices and quantities of goods and services that will be exchanged
markets
The study of individual consumers, workers, producers, businesses, and industries
microeconomics
The value of the best forgone alternative. What one really gives up when making a choice.
opportunity cost
The process of comparing the marginal benefits and marginal costs of an action
rational-decision making
Our wants are greater than our abilities to satisfy them. This leads to the necessity for making choices about how we use our resources.
scarcity
A cost that has already been paid and cannot be recovered.
sunk cost
Paul Krugman, an economist, divides economics into 3 categories:
Greek economics, media economics, airport economics
Type of economics that most academics use, a lot of math and graphs, this textbook
Greek economics
