Principles of Microeconomics - Economic Tools and Systems

Flashcards covering key concepts from the microeconomics lecture notes.

Opportunity Cost

The next-best alternative when undertaking any activity.

Sunk Cost

The cost that has already been incurred and cannot be recovered.

Division of Labor

Breaking down the production of a good into separate tasks to increase efficiency.

Absolute Advantage

The ability to produce something using fewer resources than another country.

Comparative Advantage

The ability to produce something at a lower opportunity cost than other countries.

Production Possibilities Curve (PPC)

A graphical representation of the maximum combination of goods that can be produced with available resources and technology.

Increasing Opportunity Cost

The principle that as production of one good increases, the opportunity cost of producing additional units rises.

Specialization

The focus on producing a limited range of goods to improve efficiency.

Economic Growth

An increase in the economy's ability to produce goods and services.

Barter

Direct exchange of one product for another without using money.