________ effect: the change in QDemanded resulting from a change in the price of one good relative to the price of other goods.
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Human capital
________: the amount of knowledge and skills that labor can apply to the work they do and the general level of health that the labor force enjoys.
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scarce resources
Trade- offs: ________ imply that individuals, firms, and governments are constantly faced with difficult choices that involve benefits and costs.
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Specialization
________: when firms focus their resources on production of goods for which they have comparative advantage, they are said to be specializing.
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next unit
Marginal: the ________ or increment of an action.
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Opportunity Cost
________: the value of the sacrifice made to pursue a course of action.
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Normal goods
________: a good for which higher income increases DEMAND.
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Inferior goods
________: a good for which high income decreases DEMAND.
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Economic Growth
________: occurs when an economys production possibilities increase.
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Production Possibilities
________: different quantities of goods that an economy can produce with a given amount of scarce resources.
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Absolute Advantage
exists if a producer can produce more of a good than all other producers
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Comparative Advantage
a producer has comparative advantage if he can produce a good at lower opportunity cost than all other producers
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Economics
the study of how people, firms, and societies use their scarce productive resources to best satisfy their unlimited material wants
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Law of Demand
There is an inverse or indirect relationship between the price of a product and the quantity of that product that consumers are willing and able to buy
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Law of Supply
There is a direct or positive relationship between the price of a product and the quantity of the product supplied by the producer
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Marginal Analysis
making decisions based up weighing the marginal benefits and costs of that action
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Marginal Benefit (MB)
the additional benefit received from the consumption of the next unit of a good or service
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Marginal Cost (MC)
the additional cost incurred from the consumption of the next unit of a good or service
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Marginal
the next unit or increment of an action
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Productive Efficiency
production of maximum output for a given level of technology and resources
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Productivity
the quantity of output that can be produced per worker in a given amount of time
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Resources
called factors of production, these are commonly grouped into the four categories of labor, physical capital, land or natural resources, and entrepreneurial ability
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Scarcity
the imbalance between limited productive resources and unlimited human wants
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Substitute goods
two goods are consumer substitutes if they provide essentially the same utility to the consumer
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Substitution effect
the change in QDemanded resulting from a change in the price of one good relative to the price of other goods
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Technology
a nations knowledge of how to produce goods in the best possible way
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Trade-offs
scarce resources imply that individuals, firms, and governments are constantly faced with difficult choices that involve benefits and costs
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Utility
The use or satisfaction that a good or service provides to a consumer
Studied by 19 people
