Definitions for chapter 1

Definitions for chapter 1 - Marginal cost-The opportunity...

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Definitions for Chapter 1 Scarcity- The condition that arises because wants exceeds the ability of resources to satisfy them Economics- The social science that studies the choices that we make as we cope with scarcity and the incentives that influence and reconcile our choices Goods and services- The objects (goods) and the actions (services) that people value and produce to satisfy human wants Self-interest- The choices that are best for the individual who makes them Social interest- The choices that are best for society as a whole Rational Choice- A choice that uses the available resources to best achieve the objective of the person making the choice Opportunity cost- The opportunity cost of something is the best thing you must give up to get it Sunk cost- A previously incurred and irreversible cost Benefit- The benefit of something is the gain or pleasure that it brings Margin- A choice on the margin is a choice that is made by comparing all the relevant alternatives systematically and incrementally
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Unformatted text preview: Marginal cost-The opportunity cost that arises from a one-unit increase in an activity, The marginal cost of something is what you must give up to get one additional units of it Marginal benefit-The benefit that arises from one unit increase in an activity, the Marginal benefit of something is measured by what you are willing to give up to get one additional unit of it Incentive-A reward or a penaltya carrot or a stickthat encourages or discourages an action Microeconomics-The study of the choices that individuals are businesses make and the way these choices interact and are influenced by governments Macroeconomics-The study of the aggregate (or total) effects on the national economy and the global economy of the choices that individuals, businesses, and governments make Correlation-The tendency for the values of to variables to move in a predictable and related way...
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