Decision Making, Scarcity, and Productivity (Vocabulary)

Vocabulary flashcards covering scarcity, opportunity cost, marginal decision-making, PPF concepts, productivity, technology, and government intervention.

Scarcity

The fundamental economic problem of limited resources relative to unlimited wants, forcing tradeoffs.

Opportunity Cost

The value of the next-best alternative forgone when choosing one option over another.

Marginal Analysis

Evaluating decisions by comparing the additional benefits and costs of a small, incremental change.

Marginal Decision Making

Choosing actions by weighing marginal benefits against marginal costs to determine whether to do more or less.

Production Possibility Frontier (PPF)

A curve showing the maximum feasible combinations of two goods that can be produced with given resources and technology.

Efficient Point

A point on the PPF where resources are fully utilized and production is at maximum given constraints.

Inefficient Point

A point inside the PPF where resources are underutilized or misallocated.

Feasible Point

A point on or inside the PPF; attainable with current resources and technology.

Not Feasible Point

A point outside the PPF; unattainable with current resources and technology.

Bowed-Out PPF

A concave (bowed) production possibility frontier, reflecting increasing opportunity costs as more of one good is produced.

Technology

Advances or methods that enable more output from the same resources, shifting the frontier outward.

Productivity

Output per unit of input; higher productivity expands a country’s ability to produce goods and services.

Standard of Living

Level of wealth, comfort, and access to goods/services in a country, linked to productivity and production.

Government Intervention

Policy actions by the government to correct market failures and improve resource allocation when markets are inefficient.

Supply and Demand (price mechanism)

Market forces that determine prices and quantities; government may intervene when markets fail.