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21 Cards in this Set
- Front
- Back
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explicit cost |
actual monetary $ for a product |
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implicit cost |
amount of money gained if an alternative, optimal action is taken |
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Utility |
satisfaction |
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investment |
amount of money spent by businesses to improve production |
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consumer goods |
goods meant for direct consumption by the consumer |
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capital goods |
goods meant for indirect consumption by individuals (for make other goods or to help a business) |
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Four Factors of Production |
land, labor, capital, entrepeneurship |
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land |
anything that comes from nature |
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labor |
any effort someone devotes to a task |
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human capital
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any skills / experience that helps increase the value of a person |
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physical capital |
any human-made resource used to create things |
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product market |
place where consumers by goods from businesses |
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resource (factor) market |
place where businesses by resources |
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Circular flow model |
model in which businesses give goods to individuals for money and businesses receive resources from other businesses or from individuals. |
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PPC (Production Possibility Curve) |
Measures ability to create two different goods on two axes. -Slope = Opportunity Cost |
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Constant Opportunity Cost PPC |
(linear) |
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Law of Increasing Opportunity Cost |
As you produce more of a good A, the opportunity cost will increase (because you will be producing less and less of good B) i.e. PPC is concave down |
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Productive Efficiency |
Products are made at the cheapest possible cost Measure of how close we are to the boundary of the PPC |
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Allocative Efficiency |
The right proportion of products is being created based on society's desires Measure of where we are on the boundary of the PPC |
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3 PPC Growth Reasons |
Resources, Technology, Trade |
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Input vs Output PPC Problem |
Input problems involve showing how much input is necessary per unit work. Output problems show how much output there is per unit work. |
