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13 Cards in this Set

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economic theory
A generalization that summarizes what we understand about the econoic choices that people make and the economic performance of industries and natons.
Ceteris paribus
"other things being equal, if all other relevent things remain the same.
Complementary approaches
-natural experiments
-econometric investigations
-economic experiments
Natural Experience
a situation that arises in the ordinary course of ecoomic life in which the one factor of interest is different and other things are equal.
Correlation
the tendacy for the value3s of two variebles to move in a predictable and related way.
correlation shows
strenght of casual influences of one variable on the other.
Post hoc fallancy`
the error of reasoning that a first event cause a second event because the first occured before th second.
To distangle cause and effect..
economists use models to interpret correlation in the data.
Rational Choice
one that uses the available resource to isfy the wants of the person making the choice.
models based on four ideas:
1. Macroeconomic performance results dfrom rational choices that respond to the incentives people face
2.the standard of living improves when production per prson incrases
3. the cost of living riwes when the quantity of money increases faster than production
4. economic fluctuations result from expenditures and productivity fluctuations
Opportunity Cost
the best thing that you must give up to get something
benefit
something is the gain or pleasure that it brings
Margin
a choice that is made by comparing all the relevant alternatives systematically and incrementally.