Principles of Microeconomics
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A set of vocabulary flashcards based on core concepts from Principles of Microeconomics lectures.
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11 Terms
Scarcity
The limited availability of resources to meet unlimited wants.
Trade-off
The concept that when one option is increased, another option must be decreased.
Opportunity Cost
The value of the next best alternative that must be foregone to take an action.
Rational Choice
A theory about how people and firms make choices when facing a trade-off.
Cost-Benefit Analysis
A process by which decisions are made comparing the costs and benefits of an action.
Economic Surplus
The difference between the benefit of an action and the cost of that action.
Normative Analysis
An approach that focuses on how people should behave or what ought to be.
Positive Analysis
An approach that describes how people actually behave or what is factual.
Sunk Cost
A cost that has already been incurred and cannot be recovered.
Marginal Benefit
The additional benefit received from consuming one more unit of a good or service.
Marginal Cost
The additional cost incurred from producing one more unit of a good or service.
Note 
Flashcards (63)