Chapter 1 Vocab Flashcards
Art of economics
Application of the knowledge learned in positive economics to achieve the goals one has determined in normative economics.
Economics decisions rule
If the marginal benefits of doing something exceed marginal cost, do it. If MC > MB, don’t do it.
Economic forces
The necessary reactions to scarcity
Economic model
Framework that places the generalized insights of the theory in a more specific contextual setting.
Economic policies
Actions (or inaction) taken by government to influence economic actions.
Economic principle
Commonly held economic insight stated as a law or principle.
Economics
Study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society.
Efficiency
Achieving a goal as cheaply as possible.
Experimental economics
A branch of economics that studies the economy through controlled experiments. (Lab, computer, and field)
Impartial spectator tool
Each person places themselves in the position of a third-person examiner and judges a situation from everyone’s perspective, not just their own.
Implicit costs
costs associated with a decision that often aren’t included in normal accounting costs.
Invisible hand
Price mechanism, the rise and fall of prices that guide our actions in a market.
Invisible hand theorem
A market economy, through the price mechanism, will tend to allocate resources efficiently.
Macroeconomics
Study of the economy as a whole.
Marginal benefit
Additional benefit above what you’ve already derived.
