Chapter 18 Vocab Flashcards
economics
the study of how we make decisions in a world where resources are limited
the study of how individuals and societies make choices about ways to use scarce resources to fulfill their needs and wants
the study of how we make decisions in a world where resources are limited
the study of how individuals and societies make choices about ways to use scarce resources to fulfill their needs and wants
economics
needs
the things that are required for survival, such as food, clothing, and shelter
the things that are required for survival, such as food, clothing, and shelter
needs
wants
things we would like to have, such as entertainment, vacations, and other items that make life more comfortable and enjoyable
things we would like to have, such as entertainment, vacations, and other items that make life more comfortable and enjoyable
wants
scarcity
what occurs whenever we do not have enough resources to produce all of the things we would like to have
what occurs whenever we do not have enough resources to produce all of the things we would like to have
scarcity
economic models
simplified representations of the real world that are used to explain how the economy works (its behavior), or to predict what would happen if something in the economy should change
simplified representations of the real world that are used to explain how the economy works (its behavior), or to predict what would happen if something in the economy should change
economic models
trade-off
the alternative you face if you decide to do one thing rather than another
the alternative you face if you decide to do one thing rather than another
trade-off
opportunity cost
the cost of the next best use of your time or money when you choose to do one thing rather than another
the cost of the next best use of your time or money when you choose to do one thing rather than another
opportunity cost
marginal cost
the extra, or additional, cost of producing one additional unit of output
the extra, or additional, cost of producing one additional unit of output
marginal cost
marginal benefit
the additional or extra benefit associated with an action
the additional or extra benefit associated with an action
marginal benefit
cost-benefit analysis
the comparison of the marginal costs and the marginal benefits of a decision
(“Rational economic decision making tells us to choose an action when the benefits are greater than the costs.”)
the comparison of the marginal costs and the marginal benefits of a decision
(“Rational economic decision making tells us to choose an action when the benefits are greater than the costs.”)
cost-benefit analysis
