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| Though we have boundless needs and wants, the resources available to us are limited. Scarcity means we need to make choices: more of one good thing usually means less of another. |
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| An individual, firm, or society will be better off taking an action if the benefits outweigh the costs. |
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| Someone with well-defined goals who tries to fulfull them as best as he/she can. |
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| The highest price you're willing to pay for a good or service. |
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| The value of the next-best alternative that must be forgone in order to undertake an activity. |
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| The total benefit of undertaking an activity divided by the units of the activity. |
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| The extra benefit from undertaking in one more unit of an activity. |
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| The total cost of pataking in an activity divided by the units of the activity. |
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Term
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| The extra cost from partaking in one more unit of an activity. |
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Term
| Principle of Relevant Costs |
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| The idea that while considering whether to produce/consume more of a good, what matters is the cost of one more unit (marginal cost). |
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| Economic analyis that offers cause and effect explanations of economic relationships. |
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| Welfare/Normative Economics |
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Definition
| Economic analysis relfecting subjective value judgements. |
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| When two variables move together but are otherwise unrelated. |
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Term
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| The argument that because something is true for a part, it will be true for the whole. |
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