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Definition
| needs and wants are boundless, but resources are limited so having more of one good leads to less of another |
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Term
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Definition
| An individual should take an action if and only if, the extra benefits from taking the action are at least as great as the extra costs. |
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| What do economists use to Measure which good, and how much to use when considering the Scarcity Principle? |
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Definition
| The Cost benefit principle |
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Term
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Definition
| A person is more likely to take an action if its benefits rises, and less likely to to take it if its cost rises. In short, incentives matter |
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| An example of cost benefit analysis? |
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Definition
| the benefit of not doing something- going to store to buy a 10 dollar game or staying home. benefit is 10 dollars if you stay at home |
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Term
| An individual should take an action if the extra benefits from taking the action are at least as great as the ..... cost. |
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Definition
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Term
| the economic surplus to an individual from consuming a good is given by the total benefits received from consuming the good minus the total ..... indiv occurs from consuming. |
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Definition
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| economic surplus equation (for an individual consuming a good) = |
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Definition
| total benefit- total costs |
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Term
| when choosing from two options to decide which would provide the better benefit, which opportunity cost would you choose? |
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Definition
| the next best alternative, higher of the 2 |
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Term
| the economic surplus from any action is the... |
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Definition
| benefit of the action minus the cost |
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Term
| What is the pitfall of only considering proportional ants rather than dollar ants? |
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Definition
| The absolute dollar amount can be the same in two scenarios, but the amount of money it is proportionate to will be diff. The causes a pitfall because you're still saving a lot of money |
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Term
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Definition
| a cost that is beyond recovery (non-refundable ticket) |
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Term
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Definition
| the increase in cost that result from carrying out one additional unit of an activity |
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Definition
| the increase in total benefit form carrying out one additional unit of activity |
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Term
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Definition
| total cost of n units of an activity divided by n |
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Term
| marginal benefit needs to exceed marginal cost |
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Definition
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