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Labor
________- workers and their level of education and experience; examples: teacher with no experience not as good.
Macroeconomics
________- decision- making by governments or countries (how much taxes, should we drill for oil)
Microeconomics
________- decision- making by individuals, households, and businesses (examples: pay bills, family vacation)
economic theory
All ________ is based on the fact that incentives influence human behavior in a predictable manner.
Benefit Analysis
Cost ________- a way to illustrate a choice or decision.
Positive incentive
________- rewards you get, added bonuses, (ex: sign contract and get an added bonus; buy one get one free)
Utility
________- your happiness or satisfaction.
Capital
________- any good or service used to produce another good or service; examples: car with all parts (lots of capital)
Producer incentive
________- produce (business owners)- modify producer behavior so they produce more (moving out to Ooltewah to meet people's needs)
FEC 1
Scarcity and choice
FEC 2
Rationality
Utility
your happiness or satisfaction
Rational self-interest
your personal utility (happiness) your rational self-interest is different than anyone elses bc based on your own personal thought process
Cost Benefit Analysis
a way to illustrate a choice or decision
If the benefits outweigh the costs
the choice is rational
Macroeconomics
decision-making by governments or countries (how much taxes, should we drill for oil)
FEC 3
Trade-offs and Opportunity Costs
Famous Economics Saying
"There is no such thing as a free lunch."
Costs are more than just money
time and energy; if you give something up it could be a cost (it can be anything)
Trade off
the choice you did not choose (go home to take a nap instead of working out)
Opportunity cost
benefits of the choice you didnt make; the benefits become costs (go to UTC instead of UTK lose the choice of an SEC school)
Benefits
not far from home, mostly quick, good fries
trade-off
benefits now become opportunity costs
Costs
pricey, downtown, time, gas, look nicer
Benefits
love the food, see the lake, good atmosphere
FEC 4
Incentives Matter
Intrinsic v. Extrinsic
intrinsic=inside; extrinsic= you are being influenced by something outside of your own self-interest
Negative incentive
consequences or punishments
Consumer incentive
buyers and consumers (most effective is sales); modifying consumer behavior to consume more
Producer incentive
produce (business owners)-modify producer behavior so they produce more (moving out to Ooltewah to meet people's needs)
Problems with Incentives
people learn how to work the system to get its best benefit; not perfect
Negative incentive
Consequence or punishment
Consumer incentive
buyers and consumers (most effective is sales); modifying consumer behavior to consume more
intrinsic
your being influenced by something inside your self interest
extrinsic
your being influenced by something outside of your own self interest
incentive
pushing you to make a choice: any reason you do something
Trade off
The choice you do not choose
opportunity cost
benefits of the choice you didn’t make; the benefits become costs
Cost are more than just money
time and energy; if you give something up it could be a cost (it can be anything)
Rational self interest
your personal utility (happiness) your rational self interest is different than anyone else’s bc based on your own personal thought process
Entrepreneurial ability
ability to take land, labor and capital and create a good or service that people want to buy; examples: good management
Land
anything on the land or in the land that has value
Scarcity
everything and everywhere is limited
Note 
Flashcard (237)