Unit 2.2 And 2.3 Flashcards
What is the calculation for net benefit
Enjoyment - cost
What is opportunity cost
What you lose when you choose one action rather than the next best alternative p
What is the reservation option?
When someone makes a choice amongst the available options in a particular transaction. It’s the next best alternative option
What is the economic cost
The direct cost of an action + opportunity cost
What is economic rent
Difference between net benefit from chosen thing and net benefit of alternative
What is innovation rent
Profits in excess of opportunity cost of capital that an innovator gets by introducing new technology
What is a relative price
Price of one good or service compared to another
Why do people become better at producing when things when they focus on a limited amount of activities.
Learning by doing (acquiring skills)
Difference in ability
Economies of scale (Producing in bulk is more cost effective)
How did capitalism enhance specialisation
Expanding the role of both markets and firms
