chapter 1 Flashcards
Scarcity definition
the problem arising from limited resources and unlimited wants
Types of Resources
- capital
- entrepreneurship
- land
- labour
Resources definition
factors of production
Opportunity Cost definition
value of the next best alternative forgone when a choice is made
Marginal Benefit definition
the additional benefit gained from consuming/producing one more unit of the g&s
Considerations for Decision-Making
- benefits
- opportunity costs
- constraints
- perspectives
- intended & unintended consequences
Economic Efficiency definition
occurs when each good is produced at minimum cost & where individual people & firms get the maximum benefit from their resources
Types of Efficiency Concepts
- productive efficiency
- allocative efficiency
Productive Efficiency definition
achieved when all the available resources / inputs are fully employed to obtain maximum output possible.
Dynamic Efficiency definition
the situatuon in which firm are technologically progressive in order to reduce the average cost of production / meet the changing needs & wants ofconsumers over time
