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Chapter 1 & 2
Terms in this set (21)
Economics is defined as the study of
the choices people make and the unintended consequences of those choices
how do authors define economics
economics is a theory of choices and its unintended consequences
A trade-off always involves a
sacrifice one thing to get another, all things have a cost
People make choices primarily on the basis of
the costs and benefits of the decisions
what fundamental presupposition is the basis for the economic way of thinking
all social phenomena emerge from individuals making choices on the basis of expected additional costs and benefits to themselves
social cooperation occurs
in spite of the fact that individuals have extremely limited information
what is the dominant characteristic of rush-hour traffic? what broader does this illustrated? how?
the dominant characteristic of rush-hour traffic is movement, this illustrate the principle of social cooperation
what does an ordered, productive society look like? how does it work?
individual pursuing their own interest, extremely limited information
the resources are not unlimited
a scarce resources is one for which
there is not an unlimited supply
forces us to make choices, all goods are scarce, use resources as efficiently as possible
the economics way thinking is based on the assumption that people_____based on the expected additional______ and ______to themselves
make choices, benefits, costs
social cooperation among thousands of individuals occurs as the result of
unrelated individual decisions
in a market economy, property rights are important because
voluntary exchange, dependable information, incentives to care
what are private property rights and why are they important for decisions makers?
encourage innovation, encourage development of new talents and skills, encourage the discovery of new resources, encourage the effective use of resources, provide dependable information and incentives
the most important signals in our economy to which people respond are
what signals provide information to individual decision makers in economy
market-determined prices provide information to decisions makers
the first writer to use "the economic way of thinking"
which of the following make choices
the president of the united states
who makes choices? so what?
individuals make choices, group decisions are individual decisions with group rules
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