Econ Vocabulary chapter 1

  1. Scarcity
    the goods available are too few to satisfy individuals desires
  2. induction
    a method of reasonging in which one develops general principles by looking for patterns in the data
  3. marginal cost
    the additional cost to you over and above the cost you have already incurred
  4. sunk costs
    costs that have already been incurred and cannot be recovered
  5. marginal benefit
    the additional benefit above what you've already derived
  6. economic decision rule
    • if the marginal benefits of doing something exceeds the marginal cost do it
    • if the marginal cost of doing something exceed the marginal benefits dont do it
  7. opportunity cost
    the benefit that you might have gained from choosing the next-best alternative
  8. economic forces
    the necessary reactions to scarcity
  9. market force
    an economic force that is given relatively free rein by society to work through the market
  10. invisible hand
    the price mechanism, the rise and fall of prices that guide our actions in a market
  11. abduction
    a method of analysis that uses a combination of inductive methods and deductive methods
  12. economic model
    a framework that places the generalized insights of the theory in a more specific contextual setting
  13. economic principle
    a commonly held economic insight stated as a law or general assumption
  14. experimental economics
    a branch of economics that studies the economy through controlled laboratory experiments
  15. natural experiments
    naturally occuring events that approximate a controlled experiment where something has changed in one place but has not changed somewhere else
  16. efficiency
    achieving a goal as cheaply as possible
  17. invisible hand theorem
    a market economy through the price mechanism, will tend to allocate resources efficiently
  18. microeconomics
    the study of individual choice, and how that choice is influenced by economic forces
  19. macroeconomics
    the study of the economy as a whole
  20. economic policies
    actions or inactions taken by government to influence economic actions
  21. positive economics
    the study of what is, and how the economy works
  22. nomative economics
    the study of what the goals of the economy should be
  23. art of economics
    also called political economy the application of the knowleadge learned in positive economics to the achievement of the goals one has determiend in normative economics
Card Set
Econ Vocabulary chapter 1
Terms from chapter one