Chapter 1 - Marginal Benefit vs Marginal Cost Flashcards
Good
 Anything from which individuals receive utility or satisfaction.
Utility
The satisfaction one receives from a good.
Bad
Anything from which individuals receive disutility or dissatisfaction.
Disutility
The dissatisfaction one receives from a bad.
Land
All natural resources, such as minerals, forests, water, and unimproved land.
Labor
The work brought about by the physical and mental talents that people contribute to the production process.
Capital
Produce goods, such as factories, machinery, tools, computers, and buildings that can be used as inputs for further production.
Entrepreneurship
The talent that some people have for organizing the resources of land, labor, and capital to produce goods, seek new business opportunities, and develop new ways of doing things.
Scarcity
The condition in which I wants are greater than a limited resources available to satisfy those ones.
Economics
The science of scarcity; the science of how individuals and societies deal with the fact that wants a greater than the limited resources available to satisfy those wants.
Rationing device
A means for deciding who gets what available resources and goods.
Marginal benefits
Additional benefits; the benefits connected with consuming an additional unit of a good or undertaking one more unit of an activity.
Marginal costs
Additional costs; the cost connected with consuming an additional unit of a good or undertaking one more unit of an activity.
Decisions at the margin
Decision making characterized by weighing the additional (marginal) benefits of a change against the additional (marginal) costs of a change with respect to current conditions.
Efficiency
Exists when marginal benefits equal marginal costs.
Incentive
Something that encourages or motivated person to undertake an action.
Exchange (Trade)
The giving up of one thing for something else.
Ceteris Paribus
A Latin term meeting all other things constant or nothing else changes.
Theory
An abstract representation of the real world designed with the intent to better understand it.
Abstract
The process (used in building a theory) of focusing on a limited number of variables to explain or predict an event.
Positive economics
The study of what is in economics.
Normative economics
The study of what should be in economics.
Micro economics
The branch of economics that deals with human behavior and choices as they relate to relatively small units: an individual, a firm, and industry, a single market.
Macro economics
The branch of economics that deals with human behavior and choices as they relate to highly aggregate markets (e.g., the market for goods and services) or the entire economy.
