ECON 111 - Chapter 1: Four Core Principles of Economics
Studied by 0 people
0.0(0)
LearnA personalized and smart learning plan
Practice TestTake a test on your terms and definitions
Spaced RepetitionScientifically backed study method
Matching GameHow quick can you match all your cards?
FlashcardsStudy terms and definitions
1 / 16
There's no tags or description
Looks like no one added any tags here yet for you.
17 Terms
1
Cost-Benefit Principle
A principle stating that you should evaluate the full set of costs and benefits of a decision and pursue the choice if the benefits are at least as great as the costs.
New cards
2
Opportunity Cost Principle
The true cost of something is the next best alternative you must give up to get it.
New cards
3
Marginal Principle
The idea that decisions about quantities should be made incrementally, weighing marginal benefits against marginal costs.
New cards
4
Interdependence Principle
The principle that your best choice depends on your other choices, the choices of others, developments in other markets, and future expectations.
New cards
5
Willingness to pay
The maximum amount an individual is willing to pay for a good or service, used to convert nonfinancial costs and benefits into monetary terms.
New cards
6
Economic surplus
The total benefits minus the total costs of a decision, measuring how much a choice improves well-being.
New cards
7
Framing effects
When a decision is influenced by how a choice is described or presented, rather than its actual costs and benefits.
New cards
8
Scarcity
The limited nature of resources, which forces individuals to make trade-offs in their decisions.
New cards
9
Sunk cost
A cost that has already been incurred and cannot be recovered, which should be ignored in future decision-making.
New cards
10
Production Possibilities Frontier (PPF)
A graph that shows the different sets of outputs that are attainable with scarce resources, illustrating trade-offs.
New cards
11
Marginal benefit
The additional benefit gained from consuming or producing one more unit of a good or service.
New cards
12
Marginal cost
The additional cost incurred from consuming or producing one more unit of a good or service.
New cards
13
Rational Rule
The rule stating that you should continue doing something until marginal benefits equal marginal costs.
New cards
14
Dependence through time
The idea that decisions made today impact future opportunities and choices.
New cards
15
Evaluating the full set of costs and benefits
To consider both financial and nonfinancial aspects of a decision before making a choice.
New cards
16
Why is opportunity cost important?
It highlights the trade-offs involved in decision-making due to scarcity of resources.
New cards
17
How do markets influence interdependence?
Changes in prices and opportunities in one market can affect choices in other markets.
Studied by 0 people
