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12 Cards in this Set

  • Front
  • Back
List the Factors of Production
Land, Labor, Capital, Entrepreneurship
(productive resources that produce goods and services) Land= rent, Labor=wages, Capital=interest, Entrepreneurship=profit
Define Opportunity Cost
The value of the next best alternative that is given up in making a choice
Define Marginal Benefit
The benefit from consuming one more unit of a good and decreases as consumption of the good increases, also = the demand curve
Define Marginal Cost
The opportunity cost of pursuing an incremental increase in an activity aka the supply cuurve
Positive vs. Normative Statements
Positive are what is aka Facts- can be tested
Normative are what ought to be aka opinion- can't be tested
Define Ceteris Paribus
Other things being equal
Define Fallacy of Composition
What is true for the parts is not always true for the whole
ex: person standing up at a football game
Define Post Hoc Fallacy
Idea that the first event causes the second event to occur
ex: sending christmas cards causes christmas
Define Production Possibilities Frontier
boundary between those combinations of goods and services that can be produced and those that cannot- shows efficiency btw mb and mc
Define Allocative Efficiency
we cannot produce more of any good without giving up some other good that we value more highly, producing at a point on the PPF MB=MC
Define Economic Growth and the two key factors which influence it
the expansion of production possibilities and increase in the standard of living
1. technological change
2. capital accumulation
Define Compartive Advantage
a person can perform an activity at a lower opportunity cost than anyone else