Principles of Economics

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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:


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