Intro and thinking like an economist Flashcards
What are the two ends of the economic systems spectrum?
-Two ends of the spectrum, centrally planned economy (maximal government intervention, they make all the decisions) and free market economy (no government intervention they make no economic decisions)
What are economic theories?
Assumptions
What are positive statements?
Describe causes and effects- how it is
What are normative statements?
Embody value judgments (how it ought ot be)
What are the two toles of economists?
Policy advisros and scientists
What do we assume about all people when studying economics?
When studying choice we assume all people are rational; the cost-benefit analysis is used to explain this- benefits are greater than costs
What is the opportunity cost?
Opportunity cost; the benefit foregone by not choosing the next best alternative
What is thinking at the margin?
Thinking at the margin: compare the marginal benefits with the marginal costs
Give an example of thinking at the margin
What is the marginal benefit?
The additional benefit of consuming
What is the marginal cost?
The additional cost of consuming another unit
Show marginal cost/benefit diagram
Show an increase in marginal cost on the MC/MB diagram
