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20 Cards in this Set
- Front
- Back
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economics defined
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The study of how people allocate their limited resources to satisfy their unlimited wants.
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microeconomics
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The study of individual decision making undertaken by individuals or companies
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macroeconomics
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the study of the economy as
a whole. unemployment, the general price level, and national income. |
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economic analysis
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the analytical framework of the course is the economic way of thinking.
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rational self-interest
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individuals act as if they
people are motivated by self-interest and respond predictably to opportunities |
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rationality assumption
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assumption that individuals will not intentionally make decisions that would leave them worse off
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incentives
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the reward for engaging in a given activity
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negative incentives
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a higher cost of engaging in an activity
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self-interest
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the pursuit of goals that make the individual feel better off
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economic models
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simplified representations of the real world
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realism
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a model captures the essential relationships to analyze a specific problem
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assumptions
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the set of circumstances in which a model is applicable
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ceteris paribus
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All Other Things Being Equal nothing changes except the factors being studied.
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usefulness
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a model is useful if it yields usable predictions supported by real-world observations.
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behavior
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what people actually do rather than what they think they will do.
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rules of thumb
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a simplified method of decision-making
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bounded rationality
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people are mostly but not fully rational
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behavioral economics
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psychological limitations that interfere with rational decision-making.
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Positive Economics
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purely descriptive statements or scientific predictions. IF, THEN facts
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normative economics
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statement about what ought to be. an assumption
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