Help
Options
Didn't know it?
click below
click below
Knew it?
click below
click below
Don't Know
Remaining cards (0)
Know
retry
shuffle
restart
0:00
Embed Code - If you would like this activity on your web page, copy the script below and paste it into your web page.
Normal Size Small Size show me how
Normal Size Small Size show me how
Econ chapter 1
Key ideas review
| Question | Answer |
|---|---|
| Define scarcity | When your wants are constrained by limited resources |
| What is the economic question related to scarcity? | What are the wants and constraints of those involved? |
| What is rational behavior? | Making choices to achieve goals in the most effective way possible |
| What is opportunity cost? | The trade off between costs and benefits |
| Define true cost | The amount you pay for a good and the opportunity you lose to do something else with that money instead |
| What is marginal decision making? | The idea that rational people compare the additional benefits of a choice against the additional costs WITHOUT CONSIDERING RELATED BENEFITS OF COSTS AND PAST CHOICES |
| Define sunk costs | Past choices, or costs that have already been incurred and cannot be reversed |
| Define incentives | Something that causes people to behave in a certain way by changing the trade-offs they face |
| What is the economic question related to incentives? | How will others respond? |
| What are the assumptions economists make about incentive? | People will respond to incentives and that nothing happens in a vacuum (any action or change will have some kind of reaction) |
| Explain efficiency | When resources are used in the most productive way possible to produce the goods and services that have the greatest total economic value to society |
| What is the economic question related to efficiency? | Why isn't everyone doing it already? |
| Define correlation | A consistent relationship between two events or variables |
| Define positive correlation | If two events or variables tend to occur at the same time or move in the same direction |
| Define negative correlation | When one event or variable increases while a related event or variable decreases |
| Define causation | A relationship between two events in which one event brings about the other |
| Why are the two often confused? | Correlation without causation, omitted variables, and reverse causation |
| Explain correlation without causation | When there is no plausible cause and effect relationship - two things randomly occur at the same time and move in the same direction but are not caused by each other |
| Explain omitted variables | Two events that occur together because both are caused by the same underlying factor (ex: firefighters and people with serious burns) |
| Explain reverse causation | Knowing which event caused which - sometimes because two events appear to have a causational relationship, it can be unclear which caused the other |
| Define a model | A simplified representation of a complicated situation |
| Why are models only approximately right? | Because they are a simplification |
| List the characteristics of a good model | It predicts cause and effect, it makes clear assumptions, and it describes the real world accurately |
| Define positive analysis/statements | A statement/analysis that makes a factual claim about how the world actually works - can be proved by data or evidence |
| Define normative analysis/statements | A statement/analysis that makes a claim about how the world should work - cannot be proven true or false |
Created by:
sarah.levitt7
Popular Economics sets