In economic decision-making, the goal is to allocate resources efficiently, which involves balancing the costs and benefits associated with different choices.

Opportunity cost refers to the value of the most desirable alternative that is sacrificed when a particular choice is made.

Diminishing returns is a key concept in marginal analysis, which states that as more of a variable input is added, the additional output gained decreases.

The optimal point in economic decision-making is reached when the marginal benefit of an action is equal to the marginal cost, resulting in the most efficient allocation of resources.

Economic decision-making is influenced by a combination of personal preferences, market conditions, and government regulations.

Marginal utility refers to the additional satisfaction or benefit derived from consuming one more unit of a good or service.

The rational choice theory assumes that individuals make decisions that maximize their expected utility, given their preferences and constraints.

An indifference point is reached when a consumer is indifferent between two bundles of goods, meaning they provide the same level of satisfaction.

Bounded rationality is a key concept in behavioral economics, which recognizes that individuals have limited cognitive abilities and make decisions based on simplified heuristics and biases.

Economic surplus refers to the situation where the marginal benefit of an action exceeds the marginal cost, resulting in a net gain for society.

In a market economy, economic decision-making is influenced by price signals, government regulations, and social norms.

Negative externality refers to the situation where the marginal cost of an action exceeds the marginal benefit, resulting in a net loss for society.

Economic efficiency is achieved when resources are allocated in a way that maximizes the total benefit or output while minimizing the total cost or input.

The optimal point in economic decision-making is reached when the marginal benefit of an action is equal to the marginal cost, resulting in the most efficient allocation of resources.

In a command economy, economic decision-making is primarily influenced by government regulations and central planning.