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15 Cards in this Set

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Why does scarcity occur?
1.)Lack of funds, 2.)the finite supply of physical resourses, 3.)finite numbers of workers to produce things, 4.) and also lack of time
Opportunity Cost
The value of the next best alternative that you have been forced to give up
Optimal decision
One that is selected after implicit of explicit comparison of the consequences of all of the possible choices and that is shown by analysis to be the one that most effectively promotes one's goals
Factors of production
land labour capital (plants and equipment) and entrepreneurship
Rational
Uses all info-interprets-optimal decision is made
Efficiency
The absence of waste
A point on the PPF
It is the max that can be produced given available resources
3 co-ordination tasks of any economy
*Efficiency
*What goods to produce
*How much of each good to distribute to each person
Adam Smith
Wrote Wealth of Nations;
thought that the govt should leave the economy alone
Competition
seen as the "invisible hand" the natural force that ensures that the market economy functions
The Wealth of Nations and The Theory of Moral Sentiments
Self-interested and competitive behavior, monitored by morality, social influence and a strong legal system would provide the foundation for a market economy.
John Stuart Mill
wrote about the welfare of workers, slavery, and individual freedoms and liberty.
Said sweatshops slavery and monopolies are the result of self-interest that has gone beyond fair play
Specialization
The division of labour and comparative advantage
Division of Labor
means that total production can be increased by dividing production up into small individual tasks, rather than one person doing the entire job from start to finish by himself
Too much division of labor
Too repetitive=Boring=limit for specialization