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10 Cards in this Set
- Front
- Back
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scarcity
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the economic problem. the condition facing all societies because there are not enough productive resources to satisfy people's unlimited wants
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economics
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the study of how people use their scarce resources to satisfy their unlimited wants
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three productive resources
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human (teacher), capital (computer), natural (tree)
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goods vs. services
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tangible item "that requires scarce resources to produce and satisfies human wants"; intangible item " "
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two simplifying assumptions made by all economic theories
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other things constant assumption- the idea is to identify variables of interest and focus exclusively on the relations among them, assuming nothing else of importance changes, other things remain constant
rational self interest- you try to maximize the expected benefit achieved with a given cost or to minimize the expected cost of achieving a given benefit |
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positive vs. normative statements
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fact vs. opinion statements
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marginal
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one more
we buy marginal increments of products as long as marginal benefit outweighs marginal cost |
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micro vs. macroeconomics defined
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market economics- study of economic behavior in particular markets, such as the market for computers
national economics- study of the economic behavior of the economy as a whole, especially the national economy |
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opportunity cost
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value of the next best alternative being passed up
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sunk cost
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should be ignored because it can't be recovered; what was passed up
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