Chapter 1: What is Economics? - Vocab

Question 1

Define Economics

Answer 1

A method of analyzing individual and social behavior.

Question 2

Define opportunity cost

Answer 2

The value of the next best alternative that must be given up when making a decision.

Question 3

Define a paradox

Answer 3

A contradiction between two principles that operate at different levels.

Question 4

Define the fallacy of composition

Answer 4

The fallacy of assuming what is true for an individual is true for a group.

Question 5

Define abstraction

Answer 5

Means ignoring many details so as to focus on the most important elements of a problem.

Question 6

Define theory

Answer 6

A theory is a deliberate simplification of relationships used to explain how those relationships work.

Question 7

Define correlation

Answer 7

Occurs when two variables tend to go up and down together.

Question 8

Explain the Post hoc, ergo propter hoc fallacy

Answer 8

The error of assuming if some event occurred before another then the first even CAUSED the second.

Question 9

Define economic model

Answer 9

A simplified, small-scale version of some aspect of the economy.