Chapter 1 Flashcards
What are the 4 core principles of economics
1) Cost/ Benefit Principle
2) Opportunity cost Principle
3) Marginal Cost/ Benefit Principle
4) Interdependence Principle
The difference between the cost and benefit of a decision is called ______.
Economic surplus
Finding the value for how much money you could have made is classified as a _____. in the cost/benefit.
Cost
A sunk cost is:
A cost that has been spent but is not recoverable
Economic downturn can decrease _________ of someones time (Cost/ benefit)
Cost
PPF stands for
Production Possibility Frontier
PPF can be pushed to the right with
Higher productivity
Opportunity cost is the next best ________.
Alternative
Give 3 examples of alternatives for opportunity cost.
1) Time
2) Money
3) Things you have to give up
What is the equation for opportunity cost
Cost of choice- Cost of next best alternative= opportunity cost
Marginal Rule helps to determine if you should hire just one more person (True or false)
True
What is the Rational Rule
MB > MC or MB = MC
List the 4 interdependencies
1) Your own decisions
2) People and business
3) Markets
4) Time
As you hire more people, their value goes down and their marginal benefit is decreasing. This is called:
Marginal Depreciation
