Key Terms
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 inefficiency.
What is "not utilizing or fully employing all of your scarce resources".
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?
The amount of one good that must be sacrificed in order to produce just ONE additional unit of another good
What is Per Unit 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?
When you sacrifice one benefit for another
What is a trade-off?
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?
When marginal costs outweigh marginal benefits.
What is "stop doing the activity".
The economic law when your PPC is bowed-out (concave) from the origin.
What is "the law of increasing opportunity costs".
The most desirable choice sacrificed whenever you make a choice.
What is opportunity cost?
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 country that can produce more of a good or service with the same amount of resources.
What the country with the ABSOLUTE ADVANTAGE.
The reason "there's no such thing as a free lunch".
What is "there are costs to everything, including every choice you make".
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 synonym for "underutilization".
What is "unemployment".