Flashcards
Chpt1 Thinking like an Economist
Flashcards do conjunto (10)
- 1the COST-BENEFIT approachIf B(x)>C(x), do x; otherwise don't. When using this test, you should express B and C in ABSOLUTE euro terms.
- 2RESERVATION PRICEThe minimum price. The price at which a person would be indifferent between doing x and not doing x.
B(x)=C(x) - 3OPPORTUNITY COSTThe value of all that must be SACRIFICED to do the activity.
- 4SUNK COSTSCosts that are beyond recovery at the moment the decision is made. These costs should be ignored in the C-B analysis.
- 5MARGINAL COSTThe increase in Total Cost that results from carrying out one additional unit of an activity.
- 6MARGINAL BENEFITThe increase in Total Benefit that results from carrying out one additional unit of an activity.
- 7AVERAGE BENEFIT/COSTThe Average Benefit/Cost of undertaking n units of an activity is the Total Benefit/Cost of an activity divided by n.
- 8EXTERNAL COSTSA cost that falls on people who are not directly involved in the activity.
- 9POSITIVE QUESTIONA question about a consequence of specific policies or institutional arrangements.
- 10NORMATIVE QUESTIONA question about what policies or institutional arrangements lead to the best outcomes.
Informações
- Descrição
- Economics 1. Microeconomics. Chapter 1.
- Criado por
- govtana
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