Important vocabulary for Chapter 1 in Econ12 text book
Terms
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- What is the definition of Economics?
- Economics is the study of how people make choices under conditions of scarcity, and of the results of those choices for society.
- What is the SCARCITY PRINCIPLE? And what is another name for it?
- The scarcity principle is one of the core principles of economics. Another name for it is "the No-free-lunch" principle. It states:Although we have boundless needs and wants, the resources available to us are limited. So having more of one good thing usually means having less of another.
- What is the Cost-Benefit Principle?
- The cost-benefit principle states: An individual (or a firm, or a society) should take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs.
- What is a rational person?
- A rational person is someone with well-defined goals who tries to fulfill those goals as best he or she can.
- What is Economic Surplus?
- Economic surplus: the economic surplus from taking any action is the benefit of taking that action minus its costs.
- What is opportunity cost?
- The opportunity cost of an activity is the value of the next-best alternative that must be forgone in order to undertake the activity.
- What is Sunk Cost?
- A cost that is beyond recovery at the moment a decision must be made.
- What is Marginal cost?
- The increase in total cost that results from carrying out one additional unit of an activity.
- What is Marginal Benefit?
- The increase in total benefit that results from carrying out one additional unit of an activity.
- What is Average Cost?
- the total cost of undertaking N units of an activity divided by N.
- What is Average Benefit?
- the total benefit of undertaking N units of an activity divided by N.
- What is Microeconomics?
- The study of individual choice under scarcity and its implications for the behavior of prices and quantities in individual markets.
- What is Macroeconomics?
- The study of the performance of national economies and the policies that governments use to try to improve that performance.