Opportunity Cost: This term refers to the value of the next best alternative foregone when making a decision. For example, if you choose to spend your time studying for an exam instead of going out with friends, the opportunity cost is the fun you would have had with your friends.
Rational Choice Theory: This theory suggests that individuals are rational decision-makers who weigh the costs and benefits before making a choice. It assumes that people act in their own self-interest to maximize utility or satisfaction.
Behavioral Economics: This field combines insights from psychology and economics to study how cognitive biases and social factors influence economic decision-making. It explores why people often deviate from traditional economic models by making irrational choices based on emotions or social norms.