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12 Cards in this Set
- Front
- Back
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Principle
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A simple truth that most people understand and accept.
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Opportunity cost
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What you sacrifice to get something.
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Marginal benefit
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The extra benefit resulting from a small increase in some activity.
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Marginal cost
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The additional cost resulting from a small increase in some activity.
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Principle of diminishing returns
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As one input increases while the other inputs are held fixed, output increases but at a decreasing rate.
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Total product curve
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A curve showing the relationship between the quantity of labor and the quantity of output.
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Marginal product of labor
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The change in output from one additional worker.
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Short run
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A period of time over which one or more factors of production is fixed; in most cases, a period of time over which a firm cannot modify an existing facility or build a new one.
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Long run
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A period of time long enough that a firm can change all the factors of production, meaning that a firm can modify its existing production facility or build a new one.
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Spillover
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A cost or benefit experienced by people who are external to the decision about how much of a good to produce or consume.
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Nominal value
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The face value of an amount of money
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Real value
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The value of an amount of money in terms of the quantity of goods the money can buy.
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