Chapter 2: The Economic Problem Flashcards Preview

Microeconomics > Chapter 2: The Economic Problem > Flashcards

Flashcards in Chapter 2: The Economic Problem Deck (21)
Loading flashcards...
1
Q

production possibilities frontier (ppf)

A

the boundary between those combinations of goods and services that can be produced and those that cannot.

2
Q

attainable production points are

A

inside and on the PPF

3
Q

unattainable production points are

A

outside/beyond the PPF

4
Q

production efficiency

A

production points ON the PPF achieve ___ ____ because there the goods and services are produced at the lowest possible cost.
points inside the PPF= attainable but inefficient

5
Q

opportunity cost of an action

A

the highest-valued alternative foregone.

6
Q

tradeoff

A

moving between points ON the PPF involves a ____ because something must be given up to get more of something else.

7
Q

allocative efficiency

A

reached when goods and services are produced at the LOWEST POSSIBLE COST and in the quantities that provide the GREATEST POSSIBLE BENEFIT.

8
Q

marginal cost of a good

A

is the opportunity cost of producing ONE more unit of it.

9
Q

preferences

A

a person’s likes and dislikes and the intensity of these feelings.

10
Q

marginal benefit

A

the benefit received from consuming ONE more unit of it.

measured by the most that people are WILLING to pay for another unit of it.

11
Q

marginal benefit curve

A

shows the relationship between the marginal benefit of a good and the quantity consumed, slopes downward.

12
Q

economic growth

A

occurs when production possibilities expand

13
Q

technological change (key factor of economic growth)

A

the development of new goods and better ways of producing good and services

14
Q

capital accumulation (key factor of economic growth)

A

the growth in capital resources including human capital

15
Q

comparative advantage

A

if someone can perform the activity at a LOWER OPPORTUNITY COST than anyone else they have the ____ ____

16
Q

absolute advantage

A

a person is MORE PRODUCTIVE than another person.

17
Q

firm

A

an economic unit that hires factors of production and organizes those factors to produce and sell goods and services

18
Q

market

A

any arrangement that allows buyers and sellers to get information and to do business with each other.

19
Q

property rights

A

social arrangements that are govern the ownership, use and disposal of anyhing people value.

20
Q

money

A

any commodity or token that is generally acceptable as a means of payment.

21
Q

opportunity cost

A

highest-valued alternative that must be given up to get something.