Chapter 1 Flashcards
(16 cards)
Marginal analysis
Decision making technique used to evaluate the costs and benefits of specific actions and decisions.
Economics
Study of how individuals and businesses make social choices to optimize satisfaction under scarce conditions
Opportunity cost
The value of the next-best alternative that must be forgone to undertake this activity.
Rational behavior
Desire to maximize satisfaction, decisions not mistake free and not unaffected by emotions and feelings, “rational self-interest” is an assumotion
Economics perspective
Ana,hiss of decision making based on principles of scarcity, utility, marginal analysis, rational behavior.
Consumers want
Greatest possible utility with unlimited wants/needs and budget constraints.
Producers want
Max profits, cost constraints and production techniques (max output with min production costs)
Utility
Happiness, satisfaction, or pleasure a consumer gets from consuming goods and services.
Cardinal (concept of utility)
A form of measurable utility that is measurable in numerical values
Ordinal (concept of utility)
A form of utility where consumers satisfaction is not measurable by quantities but rather through comparisons in consumption expressed in indifference curves.
Theories, principles, models
Used by businesses to measure what goods and services consumers prefer
Ceteris paribus
The assumption that factors other than those being considered are held constant
Microeconomics
The part of economics concerned with the decisions made by individual units (person, business, firm, industry)
Macroeconomics
The part of economics concerned with the economy as a whole
Positive economics
Facts and cause-effect relationships in the economy
Normative economics
Value judgements avisht what the economy should be like
