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13 Cards in this Set

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What is the definition of Economics?
Economics is the study of how people make choices under conditions of scarcity, and of the results of those choices for society.
What is the SCARCITY PRINCIPLE? And what is another name for it?
The scarcity principle is one of the core principles of economics. Another name for it is "the No-free-lunch" principle. It states:Although we have boundless needs and wants, the resources available to us are limited. So having more of one good thing usually means having less of another.
What is the Cost-Benefit Principle?
The cost-benefit principle states: An individual (or a firm, or a society) should take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs.
What is a rational person?
A rational person is someone with well-defined goals who tries to fulfill those goals as best he or she can.
What is Economic Surplus?
Economic surplus: the economic surplus from taking any action is the benefit of taking that action minus its costs.
What is opportunity cost?
The opportunity cost of an activity is the value of the next-best alternative that must be forgone in order to undertake the activity.
What is Sunk Cost?
A cost that is beyond recovery at the moment a decision must be made.
What is Marginal cost?
The increase in total cost that results from carrying out one additional unit of an activity.
What is Marginal Benefit?
The increase in total benefit that results from carrying out one additional unit of an activity.
What is Average Cost?
the total cost of undertaking N units of an activity divided by N.
What is Average Benefit?
the total benefit of undertaking N units of an activity divided by N.
What is Microeconomics?
The study of individual choice under scarcity and its implications for the behavior of prices and quantities in individual markets.
What is Macroeconomics?
The study of the performance of national economies and the policies that governments use to try to improve that performance.