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MacroeconomicsCh.1/2
Definitions for "Principles of Macroeconomics 3rd Canadian Edition"
| Question | Answer |
|---|---|
| Average Benefit | total benefits of undertaking in units of an activity divided by n |
| Efficiency | obtaining the max possible output from a given amount of inputs |
| Time Value of Money | the fact that a given dollar amount today is equivalent to a larger dollar amount in the future |
| Marginal Cost | the increase in the total cost that results from carrying out are additional unit of an activity |
| Post hoc Fallacy | the argument that because event A precedes even B, event A causes event B |
| Sunk Cost | a cost that is beyond recovery at the moment a decision is made |
| Fallacy of Composition | the argument that because something is true for a part it is also true for the whole |
| Normative Economics | economics statements that reflect subjective value judgements and that are based on ethical positions |
| Positive Economics | cause and effect explanations that can be proven |
| Opportunity Cost | the value of the next-best alternative that must be forgone in order to undertake the activity |
| Economic Surplus | the benefit of taking any action minus its cost |
| Rational Person | someone with well-defined goals who tries to fulfill those goals as best he or she can |
| Economics | the study of how people make choices under conditions of scarcity and the result of those choices for society |
| Comparative Advantage | one person a comperative advantage over another if his or her opportunity cost of performing a task is lower than the other persons OC |
| Absolute Advantage | one person has an absolute advantage over another if he or she takes fewer hours to perform a task than the other person does |
| Production Possibilites Curve | a graph that describes the max amount of one good that can be produced for every possible level of production of the other good |
| Productivity | units of output per hour divided by units input per hour |
| Marginal Benefit | the increase in total benefit that results from carrying out one more unit of an activity |
| Average Cost | total cost of undertaking n units of an activity divided by n |
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