incentives - methods used to encourage people to take certain actions, utility - benefits received from using a good/service, economize - make decisions according to the best combination of costs and benefits, trade-off - All alternatives given up, opportunity cost - most desireable trade off given up, cost-benefit analysis - weighing the benefits against the costs, marginal cost - additional cost of using one more unit of a product, marginal benefit - additional benefit from using one more unit of a product, guns or butter - military or consumer goods, TNSTAAFL - There is no such thing as a free lunch,

Chapter 1-2

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