Podcast
Questions and Answers
What is rational self-interest?
What is rational self-interest?
- Ignoring potential risks
- Maximizing expected benefit with given cost (correct)
- Acting against personal gain
- Minimizing all costs
What does economic choice involve?
What does economic choice involve?
Comparison of expected marginal benefit and expected marginal cost.
Marginal refers to something that is incremental or additional.
Marginal refers to something that is incremental or additional.
True (A)
What is microeconomics?
What is microeconomics?
What does macroeconomics study?
What does macroeconomics study?
Recessions are indicated by an increase in production and employment.
Recessions are indicated by an increase in production and employment.
What are economic fluctuations?
What are economic fluctuations?
Study Notes
Rational Self-Interest
- Each individual aims to maximize benefits while minimizing costs in decision-making.
- This principle guides personal choices and economic behaviors.
Economic Choice
- Involves comparing expected marginal benefits against expected marginal costs.
- Determines the best course of action based on cost-benefit analysis.
Marginal
- Refers to incremental or additional changes in an economic variable.
- Highlights shifts from the current state and their implications for decision-making.
Microeconomics
- Focuses on individual economic behaviors and choices.
- Analyzes how price and quantity are determined in specific markets.
- Examines personal decisions like studying versus leisure, borrowing versus saving, and buying versus selling.
Macroeconomics
- Studies the overall performance and health of the economy.
- Looks at aggregate measures rather than individual markets.
Recessions
- Characterized by declines in production, employment, and other economic indicators.
- Reflects a downturn in economic activity impacting the broader economy.
Economic Fluctuations
- Represent the cycles of rising and falling economic activity in relation to long-term growth trends.
- Business cycles can vary in duration and intensity, affecting nations and global economies.
Studying That Suits You
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Description
Test your knowledge on rational self-interest and economic choices with these flashcards. Each term includes a definition to help reinforce your understanding of the concepts presented in Chapter 1, Lesson 2. Perfect for students looking to solidify their grasp on fundamental economic principles.
