Opportunity cost Flashcards
(19 cards)
the cost of choosing; what you give up by choosing one option
Opportunity cost
objects that can fulfill human wants/needs, provide utility
Goods
economic activity that cannot be physically touched. Provides utility but cant be stored
Services
natural & human resources from which all goods and services must be produced
Endowment
satisfaction; economists assume maximizing this drives individual choice; measured in units
Utility
The tendency of people to engage in activities that lead to monetary gain
Profit motive
the economic power of the individual in a free market
Consumer sovereignty (freedom)
Requires government places on private firms & individuals to achieve the governments goals
Government regulation
Freedom, Security, Equity, Growth, Efficiency, Stability
Social & Economic goals
Additional increment of utility associated with consuming one more unit of a good or service
Marginal utility
in a succession of units, the specific unit you are focusing on
Margin
total satisfaction derived from consuming a specific quantity of a good/service; total of marginal utilities for all individual units used
Total utility
Satisfy
Satiate
over-simplified decision making process based on utility
initial decision
Bliss point
Maximization of utility
a measure of utility
Util
one input initially increases the initial successive units of input toward the output but will eventually add to less output
Diminishing marginal productivity
maximizing utility in light of scarcity
Balancing at the margin
utility diminishes the further in the future that utility is realized
Discounting the future
