Term
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Definition
| value of the best alternative you must pass up |
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Term
| be able to give an example of oppurtinity cost |
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Definition
| you give up an evening of pizza and friends to do a term paper |
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Term
| what do economists assume will drive you to choose your most valued alternative |
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Definition
| your rational self interest |
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Term
| Know what is the ultimate limitation when it comes to choosing from among alternatives |
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Definition
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Term
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Definition
| The cost you have already incurred and cannot recover |
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Term
| know the role that sunk cost should play in economic decisions |
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Definition
| you shuold ignore sunk cost in making economoic decisions |
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Term
| Recognize what factors should be considered in decided whether or not to go to college |
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Definition
Cost of attending college full time ?
What will be the most valued alternative you must give up to attend college |
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Term
| Recognized what factors should not be considered in decided whether or not to go to college |
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Definition
| room, board, and personal expenses |
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Term
| Know the goal of an economic theory |
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Definition
| a simplification of economic reality that is used to make predictions about the real world |
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Term
| be able to give an example of an "other-things-constant assumption" |
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Definition
| Pepsi raises prices , coke doesn't, pepsi's sales goes down |
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Term
| know the most basic "behavioral assumption" that economists make |
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Definition
| people make choices based on their own self interest |
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Term
| be able to explain why rational self-interest does not necessairily involve greed |
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Definition
| you donate your time your time based on your own personal cost of a concern |
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Term
| be able to explain how economic forces influences concern for others |
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Definition
| concern for others is influenced by the same economic forces that affect other economic choices |
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Term
| know what individuals do because of rational self-interest |
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Definition
| a consumer buys products expected to maximize his or her level of satisfaction |
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Term
| know what firms do because of ration self-interest |
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Definition
| each firm supplies the product expected to maximize that firm's profit |
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Term
| be able to recognize and give examples of positive economic statements |
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Definition
a statement about economics reality that can be supported or rejected by reference to the facts
example: the unemployment rate is 5.8 percent |
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Term
| be able to recognize and give examples of normative economic statements |
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Definition
opinion cannot be shown to be true or false by reference to the facts
example: the unemployment rate should be lower |
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