Lesson 2: Opportunity Costs and Trade-Offs Flashcards
1
Q
Trade-Off
A
Giving up one benefit for another, greater benefit (capital or consumption goods)
2
Q
Marginal Cost
A
Additional cost to produce each individual unit
3
Q
Marginal Benefit
A
Benefit derived from consuming a product
4
Q
Opportunity Cost
A
Most desirable benefit given up with each alternative
5
Q
Cost-Benefit Analysis
A
estimating strengths/weaknesses used to determine what options would be the best approach to achieving benefits while preserving savings
6
Q
Guns or Butter
A
describes the government’s choice between spending money on military or domestic needs
7
Q
Thinking at the Margin
A
Process of deciding whether to do/use one additional unit of some resource
