Chapter 3_Key Terms 2025 Expert
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Economic efficiency - 🧠 ANSWER ✔✔Producing at a point at which
average product is maximized and average variable cost is minimized.
Scarcity - 🧠 ANSWER ✔✔A situation that exists when the amount of a good
or service demanded in the aggregate exceeds the amount available at a
zero price.
Opportunity cost - 🧠 ANSWER ✔✔The cost of a decision based on the
value of the foregone opportunity.
, Invisible hand - 🧠 ANSWER ✔✔A metaphor introduced by Adam Smith
describing the role that markets play in promoting the efficient allocation of
resources.
Prisoner's dilemma - 🧠 ANSWER ✔✔A paradox in game theory where
players acting in their own self-interest choose their dominant strategies
and do not achieve the optimal outcome. In such cases, cooperation, not
competition, will result in a more profitable outcome.
Nash equilibrium - 🧠 ANSWER ✔✔A situation that emerges when all
players in a noncooperative game choose their dominant strategy and have
nothing to gain (and can only lose) by changing from their initial strategies.
Rational behavior - 🧠 ANSWER ✔✔A key behavioral assumption in
neoclassical economics that decision makers act in a purposeful manner.
In other words, their actions are directed toward achieving an objective.
Microeconomics - 🧠 ANSWER ✔✔The study of individual decision making,
pricing behavior, and market organization.
Rational Ignorance - 🧠 ANSWER ✔✔A state in which consumers stop
seeking information on a prospective purchase because the expected cost
of the additional search exceeds the expected benefits.
Verified | Ace the Test
Economic efficiency - 🧠 ANSWER ✔✔Producing at a point at which
average product is maximized and average variable cost is minimized.
Scarcity - 🧠 ANSWER ✔✔A situation that exists when the amount of a good
or service demanded in the aggregate exceeds the amount available at a
zero price.
Opportunity cost - 🧠 ANSWER ✔✔The cost of a decision based on the
value of the foregone opportunity.
, Invisible hand - 🧠 ANSWER ✔✔A metaphor introduced by Adam Smith
describing the role that markets play in promoting the efficient allocation of
resources.
Prisoner's dilemma - 🧠 ANSWER ✔✔A paradox in game theory where
players acting in their own self-interest choose their dominant strategies
and do not achieve the optimal outcome. In such cases, cooperation, not
competition, will result in a more profitable outcome.
Nash equilibrium - 🧠 ANSWER ✔✔A situation that emerges when all
players in a noncooperative game choose their dominant strategy and have
nothing to gain (and can only lose) by changing from their initial strategies.
Rational behavior - 🧠 ANSWER ✔✔A key behavioral assumption in
neoclassical economics that decision makers act in a purposeful manner.
In other words, their actions are directed toward achieving an objective.
Microeconomics - 🧠 ANSWER ✔✔The study of individual decision making,
pricing behavior, and market organization.
Rational Ignorance - 🧠 ANSWER ✔✔A state in which consumers stop
seeking information on a prospective purchase because the expected cost
of the additional search exceeds the expected benefits.
