Chapter 3: A Fundamental Economic Problem: Scarcity and Choice - Vocab Flashcards
Define resources
Instruments provided by nature and people.
Define optimal decision
A decision that best serves the objectives of the decision maker.
Define the Production Possibilities Frontier
A curve that shows the maximum quantities of outputs it is possible to produce with the available resource quantities and the current state of technologicalknowledge.
Define efficiency
A set of outputs is said to be produced efficiently if there is no way to produce more without larger input amounts or the sacrifice of other outputs.
Define allocation of resources
Refers to a societies decion on how to decide scarce infput resources among different outputs.
Define allocation of resources
Refers to a societies decision on how to decide scarce input resources among different outputs.
Define comparative advantage
One has a comparitive advantage over others if they can produce a paticular output more efficiently that the others.
Define market system
A form of economic system in which resource allocation is left to consumers and producers to decide.