Chapter 1 Study Guide

Chapter 1 Study Guide - o Choice implies the existance of...

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Chapter One Study Guide Economics- the science of choice Methodological Individualism- is the exploring of obervable social events by finding a cause and effect relationship to earlier individual choices. Post Hoc Fallacy- the existance of a result does not mean it occured exclusively as a direct result of another action. Ceteris Paribus- "Other things the same." To theorize causality we must imagine that only one thing changes. One thing at a time. Principles of Choice o Every human action implies prior choice.
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Unformatted text preview: o Choice implies the existance of alternatives. o Choice requires a process of ranking alternatives. That process is called valuation. • Utility- (Valuation) is the value applied to each alternative. • A value scale is a diagram that shows alternatives' rankings A Figure one: A value scale indicating that alternative A is more B desirable than alternative B, and alternative B is more desirable C than alternatives C and D. D • We choose the highest valued alternative and forgo all the others....
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This note was uploaded on 04/18/2008 for the course ECON 201 taught by Professor Egger during the Fall '06 term at Towson.

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