Principles of Economics
Comparative
A producer has a(n) _____ advantage in the production of a good or a service if his or her relative opportunity cost of production is lower than the opportunity cost of other producers
MB<MC
A waste of resources that could have been used to produce something else occurs when
Labor
All physical and mental activity devoted to producing goods and services is classified as the resource called
opportunity
As long as there are differences in...,there are comparative advantages, and there will be potential for trade to make both parties better off.
Washing her car
Ciara can do one of three things with her afternoon: She can study economics, plant a garden, or wash her car. Suppose she values spending time in her garden most; next, her time washing the car, and her time studying economics the least. What is the opportunity cost of planting a garden?
being the lowest relative opportunity cost producer of a good.
Comparative advantage refers to
how people make choices in a world of scarcity.
Economics is about:
Resources
Economics is the study of how individuals and societies allocate scarce _____ among many competing uses
market
Focusing production entirely on one good or service leaves you susceptible to changes in the...
a net gain to the economy
If an activity is performed where the marginal benefit is greater than the marginal cost (MB > MC), there is:
Factors of production and inputs
In economics, resources are also called:
>
It is bad if marginal cost ___ marginal benefit
5 songs
Martin has given himself an entertainment budget of $5 per week. He has decided that each week he will spend $5 by either attending a matinee movie or downloading 5 songs. What is the non-monetary opportunity cost of seeing a movie this week?
1. Optimization 2. Marginal decision making 3. Self-interest
Rational decision making is based on three assumptions:
between
Terms of trade that are beneficial to both parties are those terms, or prices, that are ___ the two parties opportunity cost
total costs as the level of the activity increases by one unit.
The marginal cost of an activity can be found by calculating the change in:
economic
The quality of an ___ model can be measured by how well it reflects reality and whether it gives us insights that can be used in the real world.
does not have to be monetary
The wealth, or additional well being, created by trade,
more
Tomatoes represent a small subset of food, so tomatoes are relatively ____ scarce than food in general.
Marginal decision making
When you decide after studying for three hours that another hour of sleep is more beneficial to you than a fourth hour of studying, you are engaging in:
specialization
___ in trade causes individuals and nations to become interdependent
Macroeconomics
_____ deals with large-scale issues of an economy, such as total output, average price levels (and inflation), and unemployment
Comparative advantage refers to:
being the lowest relative opportunity cost producer of a good.
some resources are better suited for producing some goods or services than others
in the real world, the opportunity cost increases as production increases, because:
Specialization
is the result of low-cost producers focusing all their efforts on producing a single good or service
low
producing a good or service at a ___ opportunity cost gives the producer a comparative advantage in the market
slope
the __ of the PPF equals the trade off of the production of one good or service in terms of the other
Marginal benefit
the additional benefit associated with one more unit of an activity
resource and product
the circular model shows how households and firms interact in two markets: the ___market and the ___market
opportuntiy
the value of the next best forgone alternative is the ______cost
Opportunity cost
when spending more money on one thing means that you have less money to spend on something else, you have experienced
the terms associated with the trade
whether a good or a service will be traded depends largely on:
