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30 Cards in this Set
- Front
- Back
Economics |
The study of how humans coordinate their wants and desires. |
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Coordination |
How the three main economy problems are solved. |
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Three main economy problems |
1. What, and how much, to produce. 2. How to produce it. 3. For whom to produce it. |
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Scarcity |
The goods available are too few to satisfy individuals' desires. |
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Deduction |
A method of reasoning in which one deduces a theory based on a set of almost self-evident principles. |
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Induction |
A method of reasoning in which on develops general principles by looking for patterns in the data. |
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Economic Reasoning |
Making decisions on the basis of costs and benefits. |
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TANSTAAFL |
There Ain't No Such Thing As A Free Lunch |
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Marginal Cost |
Costs in addition to the costs that have already incurred. |
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Sunk Costs |
Costs that have already been incurred and cannot be recovered. |
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Marginal Benefit |
The additional benefit above what's already been derived. |
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Economic Decision Rule |
If the marginal benefits of doing something exceed the marginal costs, do it, and vice-versa. |
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Opportunity Cost |
The benefit you might have gained from choosing the next-best alternative. |
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Economic forces |
The necessary reactions to scarcity. |
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Market Force |
An economic force that is given relatively free rein by society to work through the market. |
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Invisible Hand |
The price mechanism, the rise and fall of prices that guides out actions in a market. |
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The three forces economic reality is controlled by. |
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Abduction |
A method of analysis that uses a combination of inductive methods and deductive methods. |
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Economic Model |
A simplified framework designed to illustrate complex processes. |
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Economic Principle |
A commonly held economic insight stated as a law or general assumption. |
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Experimental economics |
A branch of economics that studies the economy through controlled lab experiments. |
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Natural Experiments |
Naturally occurring events that approximate a controlled experiment |
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Theorems |
Propositions that are logically true based on the assumptions in a model. |
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Precepts |
Rules that conclude that a particular course of action is preferable. |
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Invisible Hand Theorem |
A market economy, through the price mechanism, will tend to distribute resources efficiently. |
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Microeconomics |
The study of individual choice, and how that choice is influenced by economic forces. |
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Macroeconomics |
The study of the economy as a whole. |
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Positive Economics |
The study of what is, and how the economy works. |
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Normative Economics |
The study of what the goals of the economy should be. |
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Art of Economics |
Application of the knowledge learned in positive economics to achieve the goals one has determined in normative economics. |