Unit 1: Introduction to Economics
Terms in this set (15)
The idea that there aren't enough resources to fulfill our needs and want
The marginal benefits that occur in an action (not all or nothing)
The marginal costs that occur in an action (not all or nothing)
The value of the next best alternative
Theory of the Invisible Hand
Theory which states that if all members in an economic system act in their own self interest, all members will benefit
Tragedy of the Commons
Type of social dilemma in which self interested individuals acting independently deplete a common resource
Pursuing own self-interest over others
The willingness to bear a cost in order to benefit someone else
Reasons to do something
Represents all the combinations of goods and services that a consumer may purchase given current prices within his or her given income.
Laws of Increasing Opportunity Cost
- As you devote more to one choice, the opportunity cost will increase
- Beef vs. Corn example (why its exponential)
- Costs that you cannot recoup
- After paying, you shouldn't consider the money you spent in your decision making
A method of economic analysis that applies psychological insights into human behavior to explain economic decision-making.
A decision making method which is taken with full information and perfectly logical steps, and usually aimed at maximizing the profits.
Time Value of Money
- The greater benefit of receiving money now rather than an identical sum later