Term
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Definition
| The physical and mental efforts of an economy's people that are available to produce goods and services. |
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Term
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Definition
| All nonhuman ingredients of production. Capital resources can be further divided into natural and man-made categories. |
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Term
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Definition
| The know-how and the means and methods of production available within an economy. |
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Term
| Gross Domestic Product (GDP) |
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Definition
| The market value of all final goods and services produced within an economy during a specific time period. It ignores the issue of whether ownership of the resources used for the production is domestic or foreign. |
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Term
| Production Possibilities Curve |
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Definition
| Graphical representation of the maximum quantities of two goods and/or services that an economy can produce when its resources are used in the most effecient way possible. |
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Term
| Opportunity Cost Principle |
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Definition
| The true cost of producing an additional unit of a good or service is the value of other goods or services that must be given up to obtain it. |
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Term
| Increasing Opportunity Cost |
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Definition
| As more of a particular good or service is produced, the cost in terms of other goods or services given up grows. This gives the production possibilities curve its bow shape. |
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Term
| Mrginal Social Cost (MSC) |
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Definition
| The true cost (opportunity cost) borne by society when the production of a good or service is increased by one unit. |
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Term
| Marginal SOcial Benefit (MSB) |
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Definition
| The true benefit to society of a one-unit increase in the production of a good or service. |
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Term
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Definition
| A technique for determining the optimal level of an economic activity. In general, an activity should be expanded so long as the expansion leads to greater benefits than costs. |
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Term
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Definition
| GDP in current dollars corrected for inflation. The correction requires dividing each year's GDP in current dollars by that year's price index, in decimal form. |
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Term
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Definition
| Real GDP divided by population. |
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Term
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Definition
| GDP in current dollars divided by population. |
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