Chapter 1

Term
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Economics is the study of how people ________ _______
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Terms in this set (25)
Economics is the study of how people ________ _______
manage resources
In economics, "resources" includes _______ things as well, such as time and relationships
intangible
Microeconomics is the study of how _______ and firms manage ______.
individuals, resources
Macroeconomics is the study of the economy on a regional, national, or __________ scale.
international
_________ _________ is when people make choices to achieve their goals in the most effective way possible.
Rational behavior
_________ is the condition of wanting more than we can get with available resources.
scarcity
"What are the wants and _____ of those involved?" is an important question.
constraints
"What are the _____-_____'s?"
trade-off
Economists call the true cost of a choice __________ ________, which is equal to the value of what you have to _____ up in order to get something.
opportunity cost, give
Economists often express opportunity cost as a _________ value.
dollar
_____ ______ ________ describes the idea that rational people compare the additional _______ of a choice against the additional ____, without considering related benefits and costs of past choices.Marginal decision making, benefits, costs_______ ________ are those that have already been incurred and cannot be recovered. Sunk costs should not have any bearing on the _______ decision about what to do next.Sunk costs, marginal"How will others respond?" is an important question.sure isAn _______ is something that causes people to behave in certain ways by changing the ____-________'s that they face. Changing your behavior will change how others _______.incentive, trade-off, respondYunus came up with "_____ _______," an idea where if one person didn't repay a loan, noone else in the group could borrow again.group responsibility__________ is when resources are used in the most effective way to produce goods and services that have the greatest total _______ value to society.efficiency, economicCircumstances where the economy might not be operating "normally," or at its' most efficient, would include innovation, _______ _________, intervention, and goals other than _______market failure, profitMarket _____ is when something prevents people from capturing the ______ of an idea.failure, benefitsWe say there is a ________ correlation if two events or variables move in the same direction, or if they occur at the same __________.positive, time_________ is a consistently observed relationship between two events or variables.correlationCorrelation and causation are often confused due to correlation without ________, ________ ___________, and _____ causation.causation, omitted variables, reversibleThe circular flow model narrows the focus to two markets connecting households and firms: market for goods and _______, and the market for ________ of ________.services, factors, productionGood models make clear ___________.assumptionsA statement that makes a ______ _______ about how the world ACTUALLY works is a ________ statement.factual claim, positiveA statement that makes a claim about how the world SHOULD be is a ________ statement.normative