M2 Flashcards
what problem cause by unlimited and unsatisfied needs and wants of people
limited resource
this has something to do with land
limited in physical quantity
resources are limited in 2 essential way
limited in physical quantity
limited in use
this limitation pertains to labor, machinery, which can be used for he purpose at any one time
limited in use
2 fundamental concepts in economics
choice and opportunity cost
pertains to sacrifice only the best among the opportunities you could have taken instead
opportunity cost
any choice you make is the value we place on the best opportunity that will have to be given up if that action is take
opportunity costs
opportunity cost is ________ because it depends on the perspective of the taking the action
subjective
means the highest-valued alternative derived
opportunity cost
the decision made after considering trade offs. It’s the selection of one option from a set of alternatives
choice
a problem which everyone is affected, decisions can have external effects on other people not involved in the transaction
externalities
where does externality may arise
between producers, between consumers
between consumer and producers
a cost or benefit of an economic activity experienced by an unrelated third party
externalities
externalities can be ____ when the action imposes costs on another
negative
externalities can be ______ when the action of one party benefits on another
positive
2 types of externalities
negative
positive