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Productive Efficiency
Minimum ATC (Average Total Cost)
Allocative Efficiency
Supply = Demand, Marginal Benefit = Marginal Cost, Price = Marginal Cost
Absolute advantage
being able to produce the most of a good
Comparative advantage
Producing a good at the lowest opportunity cost
Opportunity Cost
the cost of giving up one opportunity in exchange for another one. the one you chose should be the next best alternative
Inside Production Possibilities Curve
Inefficient, due to unemployment or idle factories
On Production Possibilities Curve
Efficient, allocatively and productively
Outside Production Possibilities Curve
Impossible w/o trade or increase in tech, capital or labor
Law in Increasing Opportunity Cost
Opportunity Cost increases as you produce more of a good (diffferent goods)
Marginal Benefit > Marginal Cost
Too little, society should produce more
Marginal Cost > Marginal Benefit
Too little, society should produce less
What do Households provide to the resource market?
Land, Labor, Capital, and Entrepreneurial Ability
What do Firms provide to the Resource Market?
Wages, Rent, Interest, Profit
What do Households provide to the produce market?
money
What do firms provide to the product market?
Goods and Services
Note 
Flashcard (84)