2.1 Economics

The measures cost by what we give up/forfeit in exchange; opportunity cost measures the value of the forgone alternative

• Opportunity Cost

• Budget Constraint

• Space and Opportunity

• Budget Opportunity

The costs that we make in the past that we cannot recover.

Ex. You paid $30 but now it is $20

• Cause and Effect

• Loss of value

• Sunk Cost

• Out of Luck

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

• Budget Flow

• Budget Constraint

• Capital Allocation

• Broke

What does B = P x Q mean?

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

• True

• False

What is comparative advantage?

• when the mix of goods produced represents the mix that society most desires

• Priceline negotiator

• when no country can produce a good at a at any price in terms and when a country has no way of production

• 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

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

• allocative efficiency

• Societal Mixing

• Good Production

• Needs benefi

______is the satisfaction, usefulness, or value one obtains from consuming goods and services

A normative statement describes how the world is.

• True

• False

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

• normative statement

• law of diminishing returns

• Murphy's Law

• Law and Order