Unit 3: SCARCITY, WORK & CHOICE Flashcards
1
Q
What is average product of labour?
A
The amount of output produced, on average, by each unit of labour.
2
Q
What is marginal product of labour?
A
The additional output generated by adding one more unit of labour, while keeping other inputs constant.
3
Q
Indifference curves represent trade-offs:
A
If you give up something, you must get something else in return.
4
Q
Indifference curves are usually smooth:
A
Small changes in the amounts of goods don’t cause a big jump in utility.
5
Q
Higher indifference curves correspond to higher utility levels:
A
As we move further away from the origin, we move to combinations with more of both goods.
6
Q
A
