Week 1 Flashcards
What are the four factors of production (resources of economics)
- Land
- Labor
- Capital
- Entrepreneurial Ability
The additional benefit associated with one more unit of an activity.
Marginal Benefit = change in total benefit/change in quantity
The additional cost associated with one more unit of an activity.
Marginal Cost = Change in total cost/change in quantity
The negative relationship between the marginal benefit associated with the use of a good or service and the quantity consumed.
Decreasing marginal benefit
A condition in which the additional cost associated with each successive unit of an activity increases.
Increasing marginal cost
A graph that shows the possible combinations of two different goods or services that can be produced with fixed resources and technology.
Production possibility frontier
The ability to produce a good or service at a lower relative opportunity cost than that of another producer
comparative advantage
A characteristic of production whereby the opportunity cost associated with increasing or decreasing the production of one good or service, in terms of another, is constant at every level of production.
Constant opportunity cost
The practice of using available resources to produce a single good or service rather than multiple goods and services
specialization
The price of one good, service, or resource in terms of another.
Terms of trade
The benefit, or wealth, that accrues to a buyer or seller as a result of trading one good, service, or resource for another.
gains of trade
ANyplace where, or mechanism by which, buyers and sellers interact to trade goods, services, or resources.
market
A principle in economics that holds that because some resources are better suited to producing one good or service than antother, as the production increases, the opportunity cost of each additional unit increases
The law of increasing opportunity cost
