Decision Making
The value of the next best alternative that must be given up when making a choice.
Answer: Opportunity cost
Anything that motivates or influences human behavior.
Answer: Incentive
The economic condition most humans lived in for most of history.
Answer: Poverty
Rules, laws, norms, and systems that shape economic behavior.
Answer: Institutions
A system where buyers and sellers exchange goods and services.
Answer: Market
A cost that has already occurred and cannot be recovered.
Answer: Sunk cost
A reward that encourages behavior.
Answer: Positive incentive
The time period when rapid economic growth began.
Answer: The last 200 years
A system that protects ownership and investment.
Answer: Property rights
What determines what is produced, how much is produced, and who receives it.
Answer: Markets
Decision-making based on comparing additional benefits to additional costs.
Answer: Marginal thinking
A punishment that discourages behavior.
Answer: Negative incentive
A major driver of modern economic growth.
Answer: Innovation
Why businesses invest more in countries with strong institutions.
Answer: Trust and stability
Signals that coordinate decisions between buyers and sellers.
Answer: Prices
The economic condition that forces individuals and societies to make choices.
Answer: Scarcity
Outcomes that were not planned or expected from a decision or policy.
Answer: Unintended consequences
A system that supports trust, stability, and investment in society.
Answer: Institutions
The way institutions affect economic behavior.
Answer: By shaping incentives
The process that adjusts supply and demand.
Answer: Price changes
The academic field defined as the study of infinite wants and limited resources.
Answer: Economics
The reason policies often fail to produce perfect results.
Answer: People respond to incentives
The process that dramatically increased productivity and living standards.
Answer: Industrialization
What weak institutions discourage.
Answer: Investment and growth
The system that allocates resources without central planning.
Answer: Market economy