Economics Ch 1 Sec 2 – Flashcards
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all the alternatives that we give up whenever we choose one course of action over others
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what are tradeoffs?
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the 2nd most desirable alternative given up as a result of a decision
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what are opportunity costs?
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when you decide how much more or less to do
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what is thinking at the margin?
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best
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when you make the first move, you get the _____ benefits
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everyone
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Who makes trade-offs?
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Not everyone can get everything they want, exactly how they want it, when there are other people involved too
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why do decisions involve trade-offs?
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it depends how much each individual is willing to give up in order to receive their ideal benefit
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why does opportunity cost vary?
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different options and their benefits/ opportunity cost
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what does thinking at the margin help compare?
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Trade offs are all the alternatives that we give up when we choose one course of actions over others, and opportunity cost is the most desirable alternative given up as a result of a decision
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How does an opportunity cost differ from a trade-off?
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Decisions that require a nation's choice of investing in military goods versus civilian goods
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what are "guns or butter" decisions?
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People will choose between the one you will have not as much of an opportunity cost but more benefit, or they will choose the one which gives them the benefit they want, no matter the opportunity cost
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how does thinking at the margin- also called cost/benefit analysis-change the decision making process?
