Criteria in Economics Policy Making

What are the four specific criteria used most often in economics to make policy judgments?

Efficiency, equity, growth, and stability

What is the main difference between positive economics and normative economics?

Positive economics attempts to understand behavior and operation of economies based on facts and data, while normative economics involves value judgments and opinions.

Explain how understanding the concept of opportunity cost can influence decision-making.

Understanding opportunity cost helps individuals make better decisions by considering the value of the next best alternative foregone.

What is the concept of marginalism in economics?

Marginalism is the study of the impact of small changes, or the marginal changes, in economic variables on decision-making. Signup and view all the answers

How does an efficient market function in economics?

An efficient market is one where prices reflect all available information and resources are allocated optimally. Signup and view all the answers

What was the significance of the Industrial Revolution in economic history?

The Industrial Revolution marked a period of significant technological advancements and economic transformation, leading to the shift from agrarian societies to industrialized economies. Signup and view all the answers

What are the two kinds of questions that Economics asks and attempts to answer?

Positive and normative questions Signup and view all the answers

What is the focus of positive economics?

Positive economics focuses on facts and cause-and-effect relationships. Signup and view all the answers

What is the focus of normative economics?

Normative economics focuses on value judgments and what ought to be. Signup and view all the answers

Explain the concept of opportunity cost in economics.

Opportunity cost refers to the value of the next best alternative that must be foregone when a choice is made. Signup and view all the answers

What does marginalism refer to in economics?

Marginalism focuses on the evaluation of the costs and benefits of small changes in economic activities. Signup and view all the answers

Describe the concept of efficient market in economics.

Efficient market refers to a market where prices fully reflect all available information. Signup and view all the answers

Define opportunity cost in economics.

Opportunity cost is the best alternative that we forgo, or give up, when we make a choice or a decision. Signup and view all the answers

What is marginalism in economics?

Marginalism is the process of analyzing the additional or incremental costs or benefits arising from a choice or decision. Signup and view all the answers

How do efficient markets function according to economics?

Efficient markets work by quickly reflecting all available information in the prices of goods and services. Signup and view all the answers

Why is studying economics important?

Studying economics is important to learn a way of thinking, understand society, and be an informed citizen. Signup and view all the answers

How does economics help individuals and businesses make decisions?

Economic analysis provides a structured way of thinking about choices, trade-offs, and resource allocation. Signup and view all the answers

What are some key concepts in economics that can change the way we look at everyday choices?

Opportunity cost, marginalism, and the working of efficient markets are fundamental concepts in economics. Signup and view all the answers