Week 1 Flashcards
Economics
is all about decision making; it is the discipline that studies how efficient decisions are made
theory of revealed preference
the choices we make reveal our values
3 characteristics of value
- value depends on the person
- value is different for everyone
- value depreciates over quantity
optimal arrangement principle
the theory that we order things from first to last best
Can something be priceless?
no
Why do we value money?
we don’t value money, we value what money can give us in exchange
What is cost?
the value of the best alternative that is scarificed when making a decision
no free lunch principle
the fact that any decision involves cost; even if it is free to you, to someone else it isn’t free
Macroeconomics
the study of entire economies, using concepts like total output, the unemployment rate, the national debt, and total investment
scarcity
having higher demands than resources can satisfy; someone pays the cost
marginal decisions
all or nothing decisions
marginal value
value of the individual units of that something
marginal analysis
the marginal cost must be within the marginal value to make whatever it is worth it
The law of diminishing returns
having too many people working on the same thing or place and the production decreases instead of decreases
What is the same as the demand curve?
the marginal value curve
