Opportunity Costs
The true cost of your decision.
What is your next-best option?
Economists say both parties are made better-off by trade because trade is ______.
What is voluntary?
Someone who uses up fewer resources to complete a task has this.
What is absolute advantage?
The enjoyment you get from an additional unit of something (e.g. another slice of pizza, another episode of Friends, etc.).
What is marginal benefit?
States the consequences of an action, remains objective.
What is a positive statement?
These costs are not opportunity costs (i.e. can't be affected at the margin).
What are sunk costs?
These are the total gains from trade if a buyer values a product at $19 and a seller's opportunity cost of selling the product is $14.
What is $5?
Someone who has a lower opportunity cost for completing a task has this.
What is comparative advantage?
The cost imposed on you from partaking in an additional unit of something (e.g. another slice of pizza, another rollercoaster ride, etc.).
What is marginal cost?
Expresses a value judgement, is subjective.
What is a normative statement?
Charging an admission fee, scheduling class at inconvenient times, and giving extra work to anyone who attends are ways I can raise the _____ of coming to class.
What is cost?
Suppose that you value one of your books at $10 and I offer you $8 to sell me the book. This trade would not be ______.
What is mutually beneficial?
Switzerland can make 35lbs. of chocolate or 5 watches; Albania can make 6lbs. of chocolate or 1 watch. This country has the comparative advantage in making chocolate.
Who is Switzerland?
If MB > MC, do it!
What is the marginal principle?
The study of choices [in the face of scarcity].
What is economics?
The cost to a ski instructor of taking a day off is ______ on the weekend when more people ski.
What is higher?
These are the gains from trade to the seller if the buyer values the good at $19, the seller's opportunity cost of selling the good is $14, and they agree to trade at a price of $16 for the good.
What are $2?
Switzerland can make 35lbs. of chocolate or 5 watches; Albania can make 6lbs. of chocolate or 1 watch. This country has the comparative advantage in making watches.
Who is Albania?
This is an example of a _____ decision: purchasing a gym membership.
What is a total decision?
The assumption the economic model makes that says people behave in their own self-interest.
What is rational behavior?
These are the gains from trade to the buyer if the buyer values the good at $19, the seller's opportunity cost of selling the good is $14, and they agree to trade at a price of $16 for the good.
What are $3?
_______ according to comparative advantage and trading can benefit both trading partners.
What is specializing?
This is an example of a _____ decision: registering for another spin class.
What is a marginal decision?
We face trade-offs because goods are _____.
What is scarce?