Econ ch 1

the idea that people choose something when the advantages of doing so outweigh the sacrifice

• scarcity forces tradeoff

• incentives matter

• cost versus benefts

• markets coordinate trade

what is spent in money, effort, or other sacrifice to get something

• cost

• benefit

• marginal cost

• market

Adam Smith's metaphor to explain how an individual's pursuit of economic self-interest can promote the well-being of society as a whole

• invisible hand

• economic model

• ceteris paribus

• normative economics

Answer explanation

Adam Smith s considered to be the Father of Economics with his ground-breaking book "The Wealth of Nations

A visual representation of the relationship between two sets of data

• equation

• graph

• variable

• market

the idea that limited resources force people to make choices and face tradeoffs when they choose

• markets coordinate trade

• cost versus benefits

• trade makes people better off

• scarcity forces tradeoff

what is given up by adding one more unit to an activity

• marginal cost

• marginal benefit

the idea that every choice involves tradeoffs; a restatement of the scarcity-forces-tradeoffs principle

• no free lunch

• rational behavior model

• cost versus benefits

• markets coordinate trade

the assumption, used in economic models, that all factors other than those being considered remain the same; from a Latin expression meaning "other things being equal"

• ceteris paribus

• microeconomics

• invisible hand

• positive economics

a method of rational inquiry with six steps: (1) posing a question, (2) researching the question, (3) developing a hypothesis, (4) conducting studies and collecting data, (5) analyzing the data, and (6) evaluating the hypothesis

• economic model

• cost benefit analysis

• scientific method

• economic enigma

Answer explanation

there is evidence of the scientific method was used as early as 1600 BC in Egyptian medical texts

the branch of economics that uses objective analysis to find out how the economy actually works

• positive economics

• normative economics

Answer explanation

think of this as the branch of economics that has data to prove it's caims