econ Flashcards
percentage change
value in second period-value of first period divided by first value multiplied by 100
opportunity cost
the value of the best alternative
absolute advantage
the ability to produce more of a good/service than competitors using same amount of resources
comparative advantage
the ability to produce a good/service at a lower opportunity cost than other producers
economics
the study of choices people make to attain their goals, given their scarce resources
scarcity
a situation in which unlimited wants exceed the limited resources available to fufill those wants
rational
people make choices based on what they believe will make them happy
marginal cost/benefit
the additional cost or benefit associated with a small amount extra of some action
market
a group of buyers and sellers of a good or service
mixed economy
some central planning and some markets (CAN)
productive efficiency
where goods and services are produced at the lowest possible cost
allocative efficiency
where production is consistent with consumer preferences, marginal benefit of production=marginal cost
positive analysis
analysis relying on facts or logic, economies should stick to positive analysis
normative analysis
analysis relying on value judgements
microeconomics
the study of how households and firms make choices, how they interact in markets, and how the gov’t attempts to influence
macroeconomics
the study of the economy as a whole
technology
the processes a firm uses for turning inputs into outputs of goods and services
capital
durable manufactured goods that are used to produce other goods/services
model
simplified version of reality, shows essential details only
production possibilities frontier (PPF)
a curve showing the maximum attainable combinations of 2 products that may be produced with available resources
economic growth
the ability of the economy to increase the production of goods/services
trade
the act of exchanging one thing for another
free market
one with few gov’t restrictions on how a good/service can be produced or sold
property rights
the rights individuals or firms have to the exclusive use of their own property