Chapter 1 Flashcards
What is scarcity?
The problem due to limited time, energy, and money
What is economics?
How individuals businesses and markets make the best choices for themselves and how these choices interact in markets
What is opportunity cost?
The cost of the best alternative given up
What are incentives?
Rewards and penalties for choices
What is a production possibilities frontier?
The max combinations of products or services that can be produced with existing inputs
What is absolute advantage?
The ability to produce a product or a service at a lower absolute cost than another producer
What is comparative advantage?
The ability to produce a product or service at a lower opportunity cost than another producer
What is opportunity cost equal to?
The amount of a particular thing given up divided by the amount of another particular thing gained
What are inputs?
The productive resources used to produce products and services
What are the types of inputs?
- Labour
- Natural resources
- Capital equipment
- Entrepreneurial ability
What is an input market?
A market where businesses buy the inputs to produce products and services
What is an output market?
A market where businesses sell their products and services
What is a positive statement?
An objective statement about what is, that can be evaluated using facts
What is a negative statement?
A subjective statement about what you believe is, and can’t be evaluated using facts
What are implicit costs?
The opportunity costs of investing your own time or money
