Chapter 1 - Economics and Life

Question 1

What are economics?

Answer 1

Study of how people manage resources

Question 2

What are resources?

Answer 2

-Intangible things (time, tech, job experience, personal relationships)
-Natural resources (water and trees)
-Human resources (talents and knowledge)

Question 3

What is opportunity cost?

Answer 3

The true cost of your choice

Question 4

What is marginal decision-making?

Answer 4

Idea that rational people compare the additional benefits of a choice against the additional cost without considering related benefits and costs of past choices

Question 5

Sunk cost

Answer 5

Costs that have already been incurred and can’t be recovered

Question 6

Incentive

Answer 6

Something that causes people to behave a certain way by changing the trade offs they face

Question 7

Positive incentive

Answer 7

Makes people more likely to do something

Question 8

Negative incentive

Answer 8

Makes people less likely to do something

Question 9

Efficiency

Answer 9

Not only about maximizing productivity; ensures that people get what they most want and need given the available resources

Question 10

Correlation

Answer 10

A consistently observed relationship two variables