OPENSTAX CH.2 & 1.4 Flashcards Preview

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Flashcards in OPENSTAX CH.2 & 1.4 Deck (25):
1

budget constraint

outer boundary of opportunity set; all opprtunties for spending within his budget

2

OC

what must be given up to obtain something that is desierd

3

budge constraint equation

budget equals price of prod 1 times quantity of q plus product 2 price times quantity two price

4

marginal analysis

compares cost and benefit of chosing one over other

5

law of diminishing marginal utility

first few unites of any good tends to bring higher level of utility to person than consumption of later units

6

sunk costs

costs incured in past that cant be recovered and dont affect current decision

7

why is the ppf curved

bc law of diminishing reutnrs

8

ppf stands for

production possibilites fronteir

9

law of diminishing reutnrs

additional increments of resources are added to a certain prurpose marginal benefit from those added increments lowers

10

ppf shows which two kinds of efficiency

productive effiency and allocative efficiency

11

productive efiency

given available inputs/tech, impossible to produce more of one good without decrease quantity produced f another good - points ON the ppf

12

allocative efficeny

particular mix of goods society produces represents combo society most desires

13

comparative advantage

when one country can produce good at lower opportunity cost than another

14

positive statment

describes world as is

15

normantive statment

describes how world should be

16

invisible hand

promotes unitneded social benefits of individual actions

17

ppf curves bc

some resources are better suited for producing one good more than another - there are diminished returns when using those resources from producing what best suited for

18

ways to organize an economy

tranditional, command, market

19

tradtional

little economic deveopment

20

command

goals passed down from ruler or ruling class; centralized structure for economic decisions

21

market

decentralized structure/decision making, based on private enterprise- resoruce/business

22

underground economy

heavily regulated economy, seller/buyer make transactions without gov approval

23

exports

domestically produced goods

24

imports

sold domestically, produced elsewhere

25

gdp stands for, what is it

gross domestic product, total size of production in economy