econ final elzenga section 1 Flashcards
Microeconomics
the study of individual choice, and how that choice is influenced by economic factors
Economic Reasoning
making decisions based on costs and benefits
Marginal cost
the additional cost to you over and above the costs you have already incurred; not counting sunk costs (tuition is a sunk cost, so marginal cost of going to class doesn’t include tuition)
Sunk costs
costs that have already been incurred and cannot be recovered
Marginal Benefit
the additional benefit above what you’ve already derived
Economic Decision Rule
if the marginal benefits of doing something exceed the marginal costs, do it; Don’t do the converse
Opportunity Cost
the benefit that you might have gained from choosing the next-best alternative
Economic Forces
the necessary reactions to scarcity
Forces that control economic reality
Economic Forces (invisible hand)
Social and cultural forces
Political and legal forces
Market force
an economic force that is given relatively free rein by society to work through the market
Invisible hand
the price mechanism, the rise and fall of prices that guides our actions in a market
Economic Model
a framework that places the generalized insights of the theory in a more specific contextual setting
Economic Principle
a commonly held economic insight states as a law or principle
Experimental Economics
a branch of economics that studies the economy through controlled lab experiments
Natural experiments
naturally occurring events that approximate a controlled experiment where something has changed in one place but has not changed in another
