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7 Cards in this Set
- Front
- Back
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what is an incentive?
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the difference between the expected marginal benefit and the expected marginal cost
EMB-EMC=incentive |
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what is a postivie statement? normative statement?
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what is (empirically verifiable-can be tested)
what ought to be (cannot be tested because it is based on values) |
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how do we study an issue in economics?
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1. think logically about it. model a description of logical equations
2. gather evidence on it (evidence is a set of facts that support or dont support a positive statement) |
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why do we model?
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to understand thru simplification
2. to predict the future 3. to interpret the data |
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what are some of the common logical fallacies?
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1. fallacy of composition
what holds true for the individual holds true for the whole 2. post-hoc fallacy one event happens before another, therefore the first caused the second (brought umbrella/it rained) 3. other conditions fallacy 2 events have always gone together in the past, therefore they will always in the future (twins) |
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what are some of the common statistical fallacies?
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1. misleading comparison: comparing 2 or more things in such a way that it doesn not reflect their true differences. Age&books
2. selection bias: people have data that is not typical, but chosen in such a way that it skews the results. Ex: height sampling. 3.misinterpreting correlation as causation |
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what 2 important concepts does the PPF illustrate?
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1. the trade off in porduction between consumption today and consumption tomorrow
2. that specialization and trade increase output and thus increase happiness |
