econ2030 vocab all chapters

econ2030 vocab all chapters - Chapter 1 Vocabulary...

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Chapter 1 Vocabulary Economics – the study of how human beings coordinate their wants a desires, given the decision making mechanisms, social customs, and the political realities of the society. Scarcity – the goods available are too few to satisfy individuals’ desires. Marginal costs – additional cost to you over and beyond the costs you have already incurred. Sunk costs – costs that have already been incurred and cannot be recovered. Marginal benefit – the additional benefit above what you’ve already derived. Economic Decision Rule: if the marginal benefits of doing something exceed the marginal cost, do it. If the marginal costs of doing something exceed the marginal benefit, don’t do it. Opportunity cost – the benefit that you might have gained from choosing the next best option. Economic forces – the necessary reactions to scarcity. Market force – economic force that is given relatively free rein by society to work thru the market. Invisible hand – the price mechanism, the rise and fall of prices that guides our actions in a market. Economic model – a framework that places the generalized insights of the theory in a more specific contextual setting. Economic principle – a commonly held economic insight stated as a law or general assumption. Efficiency – achieving a goal as cheaply as possible. Invisible hand theory – a market economy, thru the price mechanism, will tend to allocate resources efficiently. Microeconomics – the study of individual choice, and how that choice is influenced by economic forces. Macroeconomics – the study of the economy as a whole. Economic policies – or (or inaction) taken by the government to influence economic actions. Positive economics – the study of what is, and how the economy works. Normative economics – the study of what the goals of the economy should be. The Art of Economics – the application of the knowledge learned in positive economics to the achievement of the goals one has determined in normative economics. Chapter 2 Vocabulary
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Production Possibility Curve – a curve measuring the maximum combination of outputs that can be obtained from a given number of inputs. Input – what you put into a production process to achieve an output. Output – the result of an activity Comparative advantage – the ability to be better suited to the production of one good than to the production of another good. Productive efficiency – achieving as much output as possible from a given amount of inputs and resources. Inefficiency – getting less output from inputs that, if devoted to some other activity, would produce more output. Efficiency – achieving a goal using as few inputs as possible. Laissez-faire – an economic policy of leaving coordination of individuals’ actions to the market.
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econ2030 vocab all chapters - Chapter 1 Vocabulary...

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