Chapter 1.2 Flashcards
1
Q
Guns or Butter
A
a phrase expressing the idea that a country that decides to produce more military goods (“guns”) has fewer resources to produce consumer goods (“butter”) and vice versa
2
Q
Opportunity Cost
A
the most desirable alternative given up as the result of a decision
3
Q
Thinking at the margin
A
the process of deciding whether to do or use one additional unit of some resource
4
Q
Cost/Benefit Analysis
A
a decision-making process in which you compare what you will sacrifice and gain by a specific action
5
Q
Marginal Cost
A
the cost of producing one more unit of a good
6
Q
Marginal Benefit
A
the extra benefit of adding one unit
7
Q
Trade-off
A
the act of giving up one benefit in order to gain another, greater benefit
