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Econ Chap 1 Review
Colander Macroeconomics 8th Edition Chapter 1 review
30
Economics
Undergraduate 2
09/08/2013

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Term
Economics
Definition
the study of how human beings coordinate their wants and desires, give the decision-making mechanisms, social customs, and political realities of the society
Term
Scarcity
Definition
the goods available are too few to satisfy individuals' desires
Term
Coercion
Definition
Limiting people's wants and increasing the amount of work individuals are willing to do to fulfill those wants
Term
Deduction
Definition
a method of reasoning in which one deduces a theory based on a set of almost self evident principles
Term
Induction
Definition
a method of reasoning in which one develops general principles by looking for patterns in the data
Term
Economic reasoning
Definition
addressing almost all issues using a cost/benefit approach
Term
Marginal Cost
Definition
the additional cost to you over and above the costs you have already incurred
Term
Sunk Costs
Definition
costs that have already been incurred and cannot be recovered
Term
Marginal benefit
Definition
the additional benefit above what you've already derived
Term
Economic design rule
Definition
if MB exceed MC, do it.
if MC exceed MB, don't do it.
Term
Opportunity Cost
Definition
the benefit that you might have gained from choosing the next-best alternative
Term
Economic Forces
Definition
the necessary reactions to scarcity
Term
Market Force
Definition
an economic force that is given relatively free rein by society to work through the market
Term
Invisible hand
Definition
the price mechanism, the rise and fall of prices that guides our actions in a market
Term
Abduction
Definition
a method of analysis that uses a combination of inductive methods and deductive methods
Term
Economic model
Definition
a framework that places the generalized insights of the theory in a more specific contextual setting (ie an example)
Term
Economic principle
Definition
a commonly held economic insight stated as a law or general assumption
Term
Experimental economics
Definition
a branch of economics that studies the economy through a controlled laboratory experiment
Term
Natural experiments
Definition
naturally occurring events that approximate a controlled experiment where something has changed in one place but has not changed somewhere else
Term
Theorems
Definition
propositions that are logically true based on the assumptions in a model
Term
Precepts
Definition
policy rules that conclude that a particular course of action is preferable
Term
Efficiency
Definition
achieving a goal as cheaply as possible
Term
Invisible hand theorem
Definition
a market economy, through the price mechanism, will tend to allocate resources efficiently
Term
Microeconomics
Definition
the study of individual choice, and how that choice is influenced by economic forces (bottom up)
Term
Macroeconomics
Definition
the study of the economy as a whole (top down)
Term
Economic policies
Definition
actions (or inaction) taken by government to influence economic actions
Term
Objective
Definition
leaves values and options out of an economic decision/statement
Term
Positive economics
Definition
the study of what is, and how the economy works (pure theory)
Term
Normative economics
Definition
the study of what the goals of the economy should be
Term
Art of economics (aka political economy)
Definition
the application of the knowledge learned in positive economics to the achievement of the goals one has determined in the normative economics
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