Chapter 1: Exploring Economics
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Last updated 1:52 AM on 6/7/23
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12 Terms
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Economics
the study of how individuals, businesses, and society make decisions to allocate limited resources to unlimited wants
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Economics assumes people are:
* Rational
* Self-interested
* Respond to Incentives
* Self-interested
* Respond to Incentives
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Microeconomics
the study of decision-making by individuals, businesses, and industries
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Ceteris paribus
an assumption stating that all things are held equal
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Efficiency
how well resources are used and allocated
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Production Efficiency
goods produced at the lowest possible resource cost
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Allocative Efficiency
goods and services are what society wants
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Equity
resources among people are considered fair
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Positive Question
can be easily answered with information or facts available
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Normative Question
uses society’s beliefs about what should or should not take place
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Opportunity Cost
next best alternative; what you give up to do
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Subsidies
give money to industry to stay in business
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