Economics 2

2. Model: The idea that people behave in ways that are based on reason and self-interest.
4. Costs: What is given up by adding one more unit to an activity, or the increase in total costs when you add one unit to something.
5. Benefit: What is gained by adding one more unit to an activity or what you gain by adding one more unit to something.
6. An arrangement that brings buyers and sellers together to do business with each other.
9. Factual information, often in numerical form.
11. Something that motivates a person to take a particular course of action.
12. Model: A simplified representation of reality that allows economists to focus on the effects of one change at a time.

1. the border or outer edge of something.
3. the general observation that the actions of people and governments always have effects that are not expected or intended.
7. A quantity that can vary, or change.
8. Method: A method of rational inquiry with six steps:
10. Paribus: The assumption, used in economic models, that all factors other than those being considered remain the same; from a Latin expression meaning “other things being equal”