Term
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Definition
| What we sacrifice to get something |
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Term
| Production Possibilities Curve |
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Definition
A curve that shows the possible combinations of products that an economy can produce, given that its productive resources are fully employed and efficiently used
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Term
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Definition
| The additional benefit resulting from a small increase in some activity |
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Term
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Definition
| The additional cost resulting from a small increase in some activity |
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Term
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Definition
| Increase the level of an activity as long as its marginal benefit exceeds its marginal cost. Choose the level at which the marginal benefit equals the marginal cost |
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Term
| Principle of Voluntary exchange |
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Definition
| A voluntary exchange between two people makes both people better off |
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Term
| Principle of Diminishing Returns |
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Definition
| Suppose output is produced with two or more inputs, and we increase one input while holding the other input or inputs fixed. Beyond some point-called the point of diminishing returns- outputs will increase at a decreasing rate |
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Term
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Definition
| what matters to people is the real value of money or income-its purchasing power-not its "face" value |
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Term
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Definition
| the face value of an amount of money |
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Term
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Definition
| The value of an amount of money in terms of what it can buy |
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Term
| Principle of Opportunity Cost |
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Definition
| The opportunity cost of something is what you sacrifice to get it |
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