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10 Cards in this Set
- Front
- Back
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The central economic problem
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scarcity forces us to choose and choices are costly because we must give up other opportunities that we value
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Positive/ Normative Analysis
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an objective value free approach, utilizing the scientific method/ a subjective, biased approach
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Goods/ Bads/ Service
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items we value or desire/items that we do not desire or want/ an intangible act that people want
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Opportunity cost
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the highest or best forgone opportunity resulting from a decision
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Marginal thinking
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focusing on the additional or incremental, choices
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Rule of rational choice
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individuals will pursue an activity if the expected marginal benefits are greater than the expected marginal costs
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Efficiency
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getting the most from society's scarce resources
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Comparative advantage
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occurs when a person or a country can produce a good or service at a lower opportunity cost than others can
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Positive incentives
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incentives that either reduce costs or increase benefits resulting in an increase in the activity or behaviour
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Negative incentives
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incentives that either increase costs or reduce benefits resulting in a decrease in the activity or behaviour
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