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| The study of how people allocate their limited resources to satisfy their unlimited wants |
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| things used to produce goods ans services to satisfy people's wants |
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| What people would buy if their incomes were unlimited |
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| What is the ultimate purpose of economics? |
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| What two types of analysis are Economics broken into? |
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| Microeconomics and Macroeconomics |
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| Study of decision making undertaken by individuals and by firms |
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| Study of the behavior of the economy as a whole, including such issues as changes in unemployment, general price level and national income. |
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| Total amounts or quantities |
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| This guy wrote the 1776 book called "Inquiry into the Nature and Causes of the Wealth of Nations" that states that individuals are motivated by self interest and respond to opportunities for gain. |
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| State the rationality assumption. |
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| "We assume that individuals do not intentionally make decisions that would leave them worse off." |
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| Field of study aimed at determining how the human brain makes choices. |
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| Simplified representations of the real world used as the basis for predictions or explanations. |
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| The Ceteris Paribus Assumption |
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The assumption that nothing changes except the factor or factors being studied
-Translates to 'other things equal' |
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Relying on real-world data in evaluating the usefulness of a model
-Empirical means that evidence is looked at to see whether we are right. |
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| Economists do not study how people think, rather they predict how people_____ |
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| Study of consumer behavior that emphasizes psychological limitations and complications that potentially interfere with rational decision making. |
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| What does the Bounded Rationality hypothesize? |
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| That people are nearly, but no fully rational, so that they cannot examine every possible choice available to them but instead use simple rules of thumb to sort among the alternatives that happen to occur to them |
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A value free approach to inquiry
-'If A, then B' |
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| Economics strictly based off of scientific predictions, not our feelings |
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| When our values are injected into the analysis of Economics |
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| A relationship between 2 variables that is negative meaning that an increase in one variable means a decrease in the other |
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| Change in the 'y' values divided by the change in the 'x' values as we move along the line. |
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