Economics Concepts and Fallacies: A Comprehensive Guide, Quizzes of Microeconomics

Download Economics Concepts and Fallacies: A Comprehensive Guide and more Quizzes Microeconomics in PDF only on Docsity! TERM 1 opportunity cost DEFINITION 1 the next best alternative when making a choice.example; If you do not go to a party, the next best thing to do on a friday night is watch a movie. the opportunity cost is all the beer i could have drank, had I gone to the party.*If the activity being given up is important, there is high opportunity cost TERM 2 Law of Demand DEFINITION 2 price goes /\ : you buy lessprice goes \/ : you buy more TERM 3 Positive vs. Normative DEFINITION 3 Positive; what IS ; facts; can be proved true or falseNormative; based on opinion and what SHOULD be TERM 4 Fallacy that Association is Causation DEFINITION 4 Event A isn't the CAUSE for Event B's happening TERM 5 Fallacy of Composition DEFINITION 5 What's best for ONE person isn't nessicarily true for everyone TERM 6 Mistake of Ignoring Secondary Facts DEFINITION 6 People's decisions may lead to negative consequencesExample: Illegalizing abortion leads to higher crime rates of back alley abortions (short term) and babies raised in broken homes leading to more kids growing up to criminal lifestyles TERM 7 Ceberis Paribus DEFINITION 7 "All else equal"self-interested, rational agents will try and make the best choice given the circumstances TERM 8 Marginalism DEFINITION 8 benefits that go along from making a choice TERM 9 Sunk Costs DEFINITION 9 inevitable costs that occur because of a decision. IGNORE sunk costs. TERM 10 Absolute Advantage DEFINITION 10 when someone is better at something than someone, no questions asked. someone's ability to produce something more efficientlyExample; my friend is 6'7, he can pick 60 apples in ten minutes. He is absolutely better at apple picking than I