Economics Concepts I

When the mix of goods produced represents the mix that society most desires.

All possible consumption combinations of goods that someone can afford, given the prices of goods, when all income is spent; the boundary of the opportunity set.

When a country can produce a good at a lower cost in terms of other goods, or when a country has a lower opportunity cost of production.

Adam Smith's concept that individuals' self-interested behavior can lead to positive social outcomes.

As we consume more of a good or service, the utility we get from additional units of the good or service tends to become smaller than what we received from earlier units.

As we add additional increments of resources to producing a good or service, the marginal benefit from those additional increments will decline.

examination of decisions on the margin, meaning a little more or a little less from the status quo

A statement that describes how the world should be.

Measures cost by what we give up or forfeit in exchange; opportunity cost measures the value of the forgone alternative.

All possible combinations of consumption that someone can afford given the prices of goods and the individual’s income.