Chapter 2

Question 1

An abstract description of a part of the economy; simplifying assumptions are made from complex data based in the economy

Answer 1

Economic Models

Question 2

takes production decision in economy and simplifies it down to a choice between goods to produce

Answer 2

Production Possibilities Frontier (PPF)

Question 3

increasing one input whole holding all other inputs constant will eventually result in smaller and smaller additions to output

Answer 3

Diminishing Marginal Returns

Question 4

a rule based on centuries of observations

Answer 4

empirical law

Question 5

opportunity cost of producing an additional unit of a good or enjoying one more hour of activity

Answer 5

Marginal Cost

Question 6

As we increase the production of a good, the opportunity cost of producing one more unit of output eventually increases

Answer 6

Increasing Marginal Cost

Question 7

using all of the resources in a technically and allocate efficient manner; benefits exceed costs; satisfying all wants best they can

Answer 7

economically efficient

Question 8

Idea that the more you do something, in time will lead to less productivity

Answer 8

marginal returns

Question 9

For each input, the output is decreasing

Answer 9

Increased Marginal Cost

Question 10

Using all available resources in the best way available

Answer 10

Technically efficient

Question 11

Getting People what they want in the best possible manner

Answer 11

Allocative Efficiency

Question 12

requires both Allocative and technical efficiency; the optimal point on the PPF

Answer 12

Economic Efficiency