Economics Vocabulary Chapters 1

Economics Vocabulary Chapters 1 - Marginal Cost(MC the...

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Economics Vocabulary Chapters 1-4 Scarcity - in relation to human wants (needs) existing resources are inadequate. Isn’t enough resources to go around. Everyone has resource restraints. Opportunity Costs - the cost of obtaining anything (material or other items) is the value of what must be given up to obtain that item. The cost of something is what you give up to get it. Comparative Advantage - the ability to produce a g/s at a lower opportunity cost than another producer. A country has a comparative advantage when its opportunity cost of producing a good per unit of input is lower. Absolute Advantage - when a country can produce more of a g/s per input that another country. More efficient output per unit of input or labor. (better technology) Specialization - each country specializes in and exports it’s comparative advantage good or service. The should specialize until the opportunity cost becomes too high.
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Unformatted text preview: Marginal Cost- (MC) the additional cost from an additional unit. Marginal Benefit- (MB) the additional benefit from an additional unit. Income tax- a tax on your labor. The tax reduces marginal benefits of working therefore there is an incentive to work less. Law of Demand- the price of a g/s rises the quantity demanded falls and vice versa. Law of Supply- the price of a g/s rises the quantity supplied rises. Equity- property of distributing economic prosperity fairly among the members of society Efficiency- property of society getting the most it can from its scarce resources PPF(Production Possibilities Frontier)- shows the maximum amount of a good or service that can be produced given the production of other g/s. Competitive Market- market where there are many buyers and many sellers that each has a negligible import a the market price....
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