[E] Central Problem of Economics
Law of increasing opportunity cost
As more of a particular good is produced, larger and larger quantities of the alternative good must be sacrificed; opportunity cost of production increases
Actual growth
Expansion of an economy's current output over time
Potential growth
Expansion of an economy's productive capacity over time
Economic growth
Expansion or increase in an economy's level of output or GDP over time
Opportunity cost
Measures the cost of making a choice, in terms of the next best alternative forgone
Choices
Resources are scarce, they have alternative uses, economic agents must make choices among alternative uses to maximise use of resources to achieve highest possible level of satisfaction
Production possibility curve
Shows all the different maximum attainable combinations of goods and services that can be produced in an economy, when all resources available are fully and efficiently used at given state of technology
Scarcity
Situation where limited resources available are unable to satisfy unlimited human wants
Shortage
Situation where supply is insufficient to meet demand