+
Cards In This Set
| Front | Back |
|
Opportunity Cost
|
What you must give up in order to get an item you want
|
|
Marginal Decisions
|
Decisions about whether to do a bit more or a bit less of an activity
|
|
Gains from trade
|
People can get more of what they want through trade than they could if they tried to be self-sufficient
|
|
Equilibrium
|
When no individual would be better off doing something different
|
|
Efficient
|
Resources are fully exploited to make some people better off without making others worse off
|
|
Equity
|
"fairness" people get their fair share
|
|
Production possibility frontier
|
Illustrates the trate-offs facing an economy that produces only 2 goods. It shows the maximum quanitty of one good that can be produced for any given quantity produced of the other
|
|
Factors of production
|
Resources such as land, labor, capital, and human capital, inputs that are not used up in production, and improved technology
|
|
Comparative advantage
|
Explains the source of gains from trade between individuals and countries
|
|
Absolute advantage
|
An ability to produce a particular good or service better than anyone else
|
|
Positive economics
|
Describes how the economy works
|
|
Normative economics
|
Prescribes how the economy should work
|
|
Individual consumer surplus
|
The diference between willingness to pay an price is the net gain to the consumer
|
|
Total consumer surplus
|
The sum of all individual consumer surpluses in a market, is equal to the area below the market demand curve but above the price
|
|
Individual producer surplus
|
Price of the good is above the producer's cost, creates profit for producer
|
