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14 Cards in this Set
- Front
- Back
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marginal cost
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the additional cost to you over and above the costs you have already incurred
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sunk cost
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costs that have already been incurred and cannot be recovered
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margincal benefit
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additional benefit above what you've already derived
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economic decision rule
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1) If the marginal benefits of doing something exceed the marginal costs, do it.
2) If the marginal costs of doing something exceed the marginal benefits, don't do it. |
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opportunity cost
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the benefit foregone by undertaking an activity
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economic forces
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the necessary reactions to scarcity
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market force
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an economic force that is given relatively free rein by society to work through the market (ex. changing prices)
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invisible hand
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the price mechanism, the rise and fall of prices that guides our actions in a market
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efficiency
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achieving a goal as cheaply as possible
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invisible hand theory
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a market economy, through the price mechanism, will tend to allocate resources efficiently
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economic policies
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action (or inaction) taken by government to influence economic actions
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positive economics
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the study of what is, and how the economy works
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normative economis
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the study of what the goals of the economy should be
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art of economis
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the application of the knowledge learned in positive economics to the achievement of the goals one has determined in normative economics
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