Economics Ch 1 Sec 2
Terms in this set (11)
what are tradeoffs?
all the alternatives that we give up whenever we choose one course of action over others
what are opportunity costs?
the 2nd most desirable alternative given up as a result of a decision
what is thinking at the margin?
when you decide how much more or less to do
when you make the first move, you get the _____ benefits
Who makes trade-offs?
why do decisions involve trade-offs?
Not everyone can get everything they want, exactly how they want it, when there are other people involved too
why does opportunity cost vary?
it depends how much each individual is willing to give up in order to receive their ideal benefit
what does thinking at the margin help compare?
different options and their benefits/ opportunity cost
How does an opportunity cost differ from a trade-off?
Trade offs are all the alternatives that we give up when we choose one course of actions over others, and opportunity cost is the most desirable alternative given up as a result of a decision
what are "guns or butter" decisions?
Decisions that require a nation's choice of investing in military goods versus civilian goods
how does thinking at the margin- also called cost/benefit analysis-change the decision making process?
People will choose between the one you will have not as much of an opportunity cost but more benefit, or they will choose the one which gives them the benefit they want, no matter the opportunity cost