Opportunity Cost Flashcards
1
Q
Opportunity cost is …
A
The value of the next best alternative forgone
2
Q
PPF is a diagram that …
A
Depicts the max productive potential of an economy using a combination of two goods or services
3
Q
What is A trade off ?
A
When one thing is lost to gain something else
4
Q
Does opportunity cost always exist?
A
Yes because of scarce resources
5
Q
What are capital goods ?
A
Goods that can be used to produce other goods such as machinery
6
Q
And consumer goods are..
A
goods that can’t be used to produce other goods like clothing
7
Q
What assumptions are made with the original PPF curve ?
A
A fixed amount of resources are used and there is a constant state of technology
