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| the study of the choices that individuals make given the presence of scarcity |
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| limited resources but unlimited wants |
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| the institutional structure through which individuals in a society coordinate their diverse wants |
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| prices get lower when people don't come and vise versa |
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| father of modern economics |
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| the highest valued benefit or action that must be sacrificed as the result of choosing an action. |
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| generalizations about the working if an abstract economy |
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| "holding all else constant" |
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| Production Possibility Frontier (PPF) |
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| a graph that shows the combinations of two commodities that can be produced given a fixed level of technology and resources being used efficiently at a fixed point in time |
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| The law of increasing marginal opportunity costs |
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Definition
| as an economy produces more of a good, the opportunity cost of an additional unit, expressed in terms of other goods sacrificed, will increase |
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| the time, effort, and other resources needed to search out, negotiate, and complete and exchange. |
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| you have the lowest opportunity cost of producing something |
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| you can produce more of a good with the same amount of resources as someone else. This can occur due to previous experience and/or natural talents |
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| Law of Comparative Advantage |
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Definition
| individuals, firms, regions, or nations can gain by specializing in the production of goods that they produce cheaply( at a low opp. cost) and exchanging them for goods they cannot produce cheaply |
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