B. Opportunity Cost: Flashcards
Opportunity cost
the cost of choosing; what you give up by choosing one option
Goods
objects that can fulfill human wants/needs, provide utility
Services
economic activity that is intangible; provides utility, but cannot be stored
Endowment
natural and human resources from which all goods and services must be produced -finite, but not fixed (scarcity)
Utility
satisfaction; economists assume maximizing this drives individual choice; measured in utils
Profit motive
the tendency of people to engage in activities that will lead to monetary gain
Consumer sovereignty
the economic power of the individual in a free market
Government regulation
requirements the government places on private firms and individuals to achieve the government’s goals
Social & economic goals
Freedom, Security, Equity, Growth, Efficiency, Stability
Marginal utility
additional increment of utility associated with consuming one more unit of a good or service
Margin
in a succession of units, the specific unit you are focusing on
Total utility
the total satisfaction derived from consuming a specific quantity of a good or service; the total of marginal utilities for all individual units consumed
Satiate
satisfy
Initial decision
over-simplified decision-making process based on utility (consume until marginal utility =0)
Bliss point
maximization of utility
