1.1-1.2
The definition of scarcity
What is unlimited wants and limited resources?
Visualization of production possibilities for two goods.
What is the Productions Possibilities Curve?
Cause trade inefficiency.
What are Tariffs?
A process which weighs the costs and benefits of a decision to determine its viability
What is cost-benefit analysis?
The satisfaction a consumer gains from a good
What is utility?
The factors of production
What is natural resources, capital resources, labor, human capital, and entrepreneurship?
Why the PPC is often curved.
What are Increasing Opportunity Costs?
Amount of one good that must be sacrificed in order to produce an additional unit of another good
What is Opportunity Cost?
The sum of explicit and implicit costs
What is total cost?
The amount of utility the last unit of a good provides
What is marginal utility?
The basic economic questions faced by all societies IN ORDER
What is 1. What to produce, 2. How to produce, 3. For whom to produce?
The definition of Productive Efficiency.
What is producing at a combination that minimizes costs?
Countries that have a comparative advantage in a good.
What are goods the country exports?
Direct monetary costs
What are explicit costs?
1. The consumer wishes to maximize their utility
2. The consumer will spend all their money
What assumptions do we make when using marginal analysis?
The types of economic systems
What is traditional economy, market economy, command economy, and mixed economy?
Shifters of the PPC
What is Change in the quantity or quality of resources, Change in technology, and Trade?
Allows higher consumption at a lower price.
Opportunity costs
What are implicit costs?
The value used to calculate which good to purchase the next unit of
What is MU/P?
The economic system of France
What is mixed economy?
When working with the PPC assume...
What is Only two goods can be made, Resources are fixed, Technology is fixed?
The USA produces 10,000 units of food and 5,000 machines. Germany produces 4,000 units of each. USA has...
What is comparative advantage in food?
The economic law which states that each unit of a good gives less utility than the last
What is the Law of Diminishing Marginal Utility?
The optimal combination of goods