micro def(green) Flashcards
(the environment as an) absorber of waste
the environment absorbs waste produced by human activity
Altruism (Y13)
humans often behave with more kindness and fairness than would be the case if they behaved ‘rationally’ in their own self-interest
Anchoring (Y13)
the previous price that the person paid for the product, or perhaps the first price at which they were offered for the product, acts as an anchor and affects their consumption decisions in the future)
Availability bias (Y13)
the human tendency to think that examples of things that come readily to mind are more representative than is actually the case
Behavioural economics (Y13)
behavioural economics challenges the assumption of pure rationality in our decisions and shows that an individual’s economic decisions may be biased
Behavioural nudge (Y13)
Any aspect of the choice architecture that alters people’s behaviours in a predictable way without forbidding any options or significantly changing economic incentives. To count as a mere nudge, the intervention must be easy and cheap to avoid
Bias (Y13)
a systematic, non-random error in thinking
Bounded rationality (Y13)
the idea that the cognitive, decision-making capacity of humans cannot be fully rational because of a number of limits that we face
Bounded self-control (Y13)
consumers often do not stop consuming even when it makes sense to stop
Capital
man-made aids to production
Capitalism
an economic and political system in which a country’s means of production are controlled by private owners for profit, rather than by the state
Central purpose of economic activity
the production of goods and services to satisfy needs and wants
Choice
an act of choosing between two or more possibilities
Choice architecture (Y13)
a scenario in which the environment in which someone must made a decision / choice has been carefully designed in order to try and influence that decision
Default choice (Y13)
the default choice or default option is the option that a consumer “selects” if he or she does nothing
Economic growth
in the long-run can be defined as an expansion in the productive capacity of the economy, in the short-run an increase in aggregate demand and real GPD
(Basic) economic problem
a situation in which there are limits resources to meet unlimited wants
Economic resources
resources used in the production process; inputs into the production, including labour, capital, land and entrepreneurship
Entrepreneurship
the willingness of an entrepreneur to take risks and organise production
Factors of production
resources used in the production process; n puts into production, including labour, capitol, land and entrepreneurship
Framing (Y13)
choices can be worded in a way that highlights the positive or negative aspects of the same decision, leading to changes in their relative attractiveness
Goods
tangible things that can be bought or sold and finally consumed
Heuristic (Y13)
rules of thumb that simplify decisions and represent a process of substituting a difficult question with an easier one
Human capital
the skills, knowledge and expertise that workers posses (Chicago School)
Incentive
something that motivates or encourages someone to do something
Key economic decisions
what to produce, how to produce and for whom (Samuelson)
Labour
the quantity and quality of human resources/ human capital input into the production process
Land
natural resources in an economy
Law of diminishing marginal utility
the decrease in the marginal utility derived with each addition unit of a good or service that is consumed
Loss aversion (Y13)
people’s tendency to prefer avoiding losses to acquiring equivalent gains
Mandated choice (Y13)
a situation or scenario in which people must decide in advance whether they wish to participate in a particular action
Marginal utility
the addition utility gained from consuming an extra unit of a good or service
Microeconomics
the branch of economics that studies behaviour and economic decisions made in individual households, firms and markets
Need
something that is essential or very important and not just desirable
Normative statement
a value judgment about ‘what ought to be’ which cannot be tested
Opportunity cost
the cost of a decision in terms of the benefits of the next best alternative foregone
Pareto optimum
an allocation of resources is said to be a Pareto optimum if no reallocation of resources can make an individual better off without making some other individual worse off
Positive statement
a statement of fact about ‘what is’ which can be tested
Production possibility curve/ frontier
a curve showing the maximum combinations of goods alot services that can be produced in a set period of time given available resources and the state of technology (if all resources are efficiently employed)
Productive efficiency
attained when a firm operates at minimum average cost, choosing an appropriate rate combination of inputs (cost efficiency) and producing the maximum output possible from its inputs (technical efficiency)
Property rights (Y13)
property rights confer legal control or ownership of a good
(the environment as a) Provider of amenities
the environment provides direct utility (satisfaction / welfare) to people
(the environment as a) Provider of resources
the environment and r idea inputs for the production of goods and services, this includes energy (from renewable or non-renewable sources) raw materials
Rationality (in neoclassical economics) (Y13)
rational consumers wish to maximise their satisfaction or utility from consumption by correctly choosing how to spend their limited income
Restricted choice (Y13)
restricting the number of available choices may be more likely to cause consumers to act and actually make a decision
Scarcity
a situation which there are limited resources to meet unlimited wants
Services
intangible activities provided by government, individuals and businesses
Social norms bias (Y13)
our day-to-day behaviour is influenced strongly by what we understand to be the prevailing social norms or social customs. Social norms become accepted by the majority of a given community of people
Social science
the scientific study of human society and social relationships
Sustainability
if our choices today are to be sustainable choices, they must meet present needs without compromising future generations’ ability to meet their needs (Brundtland)
Trade off
a trade off involves a sacrifice that must be made to obtain a certain product, service or experience, rather than others that could be made or obtained using the same required resources
Utility
the satisfaction derived from consuming a good or service
Want
a want describes a desire for something
