Studied by 5 peopleoptimal consumption + opportunity cost
resources
allow us to meet needs and wants
resources are
scarce
types of resources
land, labor, capital
physical capital
tools, equipment, money
human capital
knowledge
opportunity cost
the value of the resources not chosen
absolute advantage
one country produces more/at a faster rate
comparative advantage
produce with less opportunity cost
the production possibilities curve is bowed out because…
resources are not perfect substitutes
economic system
interaction of economic agents meeting needs/wants
market system
resources are privately owned by individuals
resource use/production is driven by self-interest
people without resources struggle
command system
the government owns and controls all resources
resource use is based on government plan
inefficient and poor
mixed system
elements of market and command
lots of free enterprise with some government regulation
utility
satisfaction from consuming a good/service
diminishing marginal utility
each unit has less marginal utility than the previous
optimal consumption
(MU1/P1) = (MU2/P2)
Note
Flashcard