Chapter 1: Economic Decisions Flashcards
What is it called to choose the most valuable alternative decision?
An Efficient Decisions
What is the Theory of Revealed Preference?
The choice one would make among a list of items in which determines the highest value of the items to that person
What are some characteristics of values?
Value depends on the situation.
Value can differ from person to person.
Subsequent units of the same good have less value.
If I was to choose the best product first, then second best, and then third and so on, this is called..?
The Optimal Arrangement Principle
What is the definition of cost?
The value of the best alternative which is sacrifice when a decision is made
What does the “no free lunch” principle state?
That there is always going to be an alternative sacrifice when a decision is made.
The study of entire economies as a whole on concepts like total output, unemployment rate, national debt and total investment.
What is..this class (Macroeconomic)
What is scarcity
When we have more wants than resources can satisfy
What is marginal value
The value of an individual unit in terms to the optimal arrangement principle
Economics is?
The discipline that shows how efficient decisions are made.
When we consume each unit for which the marginal value is at least as great as the marginal cost, this is called?
Marginal Analysis
What does the law of diminishing returns state?
As workers are added to a production process it will eventually become less productive. This is because there is no more room for workers to be added into production
What is Demand?
The relationship between the possible prices of something and the quantities people are willing to buy, all things being equal.
What is Supply?
The relationship between the possible prices of something and the quantities that people or firms are willing and able to sell, other things equal.
What happens when there is a Equilibrium Price?
Consumers can buy all they want and, at the same time, firms can sell all they want.
