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Section 1.2 of Prentice Hall Economics
What is Economics?: Opportunity Cost
7
Economics
12th Grade
08/24/2014

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Term
trade-off
Definition
the act of giving up one benefit in order to gain another, greater benefit
Term
"guns or butter"
Definition
a phrase expressing the idea that a country that decides to produce more military goods ("guns") has fewer resources to produce consumer goods ("butter") and vice versa
Term
opportunity cost
Definition
the most desirable alternative given up as the result of a decision
Term
thinking at the margin
Definition
the process of deciding whether to do or use one additional unit of some resource
Term
cost/benefit analysis
Definition
a decision-making process in which you compare what you will sacrifice and gain by a specific action
Term
marginal cost
Definition
the extra cost of adding one unit
Term
marginal benefit
Definition
the extra benefit of adding one unit
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