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12 Cards in this Set

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resources
instruments provided by nature or by people that are used to create goods and services. Land, labor, capital
opportunity cost
the _____ of any decision is the value of the next best alternative that the decision forces the decision maker to forgo
optimal decision
the decision that best serves the objectives of the decision maker, whatever those objectives may be.
outputs
the ____ of a firm or an economy are the goods and services it produces
inputs
the _____ used by a firm or an economy are the labor, raw materials, electricity and other resources it uses to produce its outputs
production possibility frontier
shows the different combinations of various goods that a producer can turn out, given the available resources and existing technology
principle of increasing costs
states that as the production of a good expands, the opportunity cost of producing another unit generally increases
efficiently
a set of outputs is said to be produced _____ if, given current technological knowledge, there is no way one can produce larger amounts of any output wihtout using larger input amounts or giving up some quantity of another output.
allocation of resources
refers to the society's decision on how to divide up its scarce input resources among the different outputs produced in the economy and among the different firms or other organizations that produce those outputs.
division of labor
means breaking up a task into a number of smaller, more specialized tasks so that each worker can become more adept at a particular job
comparative advantage
a country is said to have ths over another in te producion of a particular good relative to other goods if it produces that good less inefficiently that it produces other goods, as compared with the other country
market system
a form of economic organization in which resource allocation decisions are left to individual producers and consumers acting in their own best interests without central direction.