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11 Cards in this Set
- Front
- Back
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Opportunity Cost
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The highest value alternative that must be forgone when a choice is made
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Tradeoff
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Giving up one good in order to get another
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PPC
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Production Possibility Curve--a graphic representation showing the maximum quantity of goods and services that can be produced using limited resouces to the fullest extent
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Marginal Opportunity Costs
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The ammount of one good or service that must be given up to obtain one additional unit o fanother good or service
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The Law of Increasing Costs
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That fact that opportunity cost of additional units of a good generally increases as production of more units in attempted. This why the PPC is bowed out.
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Efficiency
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When an imput produces the maximum possible output. Or, the situation in which a given output is produced at minimun cost.
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Marginal Cost
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Cost of one more unit
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Marginal Benefit
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Additional benefit of one more unit.
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Inefficient Point
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Not producing to maxmimum potential. (Any point below the PPC.)
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Absolute Advantage
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Being able to produce more of a good (or at a lower cost) than someone else.
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Comparative Advantage
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The ability to produce a good or service at a lower opportunity cost (relative cost) than someone else.
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