Macroeconomics: Principles and Policy – Chapter 1: What is Economics?

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opportunity cost
value of the next best alternative that must given up because of that decision
ignoring many details so as to focus on the most important elements of a problem
deliberate simplification of relationships used to explain how those relationships work
tendency of variables to go up and down together
economic model
simplified, small0scale version of some aspect of the economy; often expressed in equations, by graphs or in words
voluntary exchange
trade in which both parties are willing participants
marginal analysis
evaluation of impact of changes
marginal cost
additional cost incurred by a one-unit increase in output
effect on third parties that are not part of an economic transaction
output per hour of work
Categories: Macroeconomics