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Opportunity cost
The next best alternative forgone when a choice is made.
PPCs and PPFs
The maximum possible combination of goods and services that are produced by goods and services that can be made with a given set of resources.
Trade off
When one thing is lost to gain something else.
Why are opportunity costs important for economic agents?
Because they cannot do both because of finite resources, so a choice has to be made for where resources are best spent.
Capital goods
Goods that can be used to produce other goods, such as machinery.
Consumer goods
Goods which cannot be used to produce other goods, such as clothing.