Econ chapter 2 Flashcards
Economic profit
the difference between the money you obtain from selling a product and the cost of producing the product
Economic incentive
The increase in personal satisfaction that may result from some economic activity
Alternative
possible course of action
Utility
the satisfaction one receives from the consumption, use, or ownership of a good or service
Invisible hand
the incentive that guides individuals to choose in the best interest of society by pursuing their own self-interests
Individual choice
decisions made by people acting separately
Util
the unit of measurement for utility
Psychic income
the nonmonetary reward we get from taking some action
Objectivity
ruling out aspects of a problem that seem important only because of your strong emotions about them
Criteria
the characteristics of a group of alternatives that will be judged to make a choice
Decision matrix
table comparing possible decisions
Market economy
an economy in which the economic questions are decided mostly by individuals in the marketplace
Model
a simplified form of reality that shows the relationship between different factors
