front 1 Budget constraint | back 1 all possible consumption combinations of goods that someone can afford, when all income is spent |
front 2 Opportunity set | back 2 all possible combinations of consumption that someone can afford given the price and the individuals income |
front 3 Opportunity cost | back 3 indicates what one must give up to obtain what they desire |
front 4 Marginal analysis | back 4 examining the benefits and costs of choosing a little more or a little less of a good |
front 5 utility | back 5 satisfaction, usefulness, or value one obtains from consuming goods. |
front 6 law of diminishing marginal utility | back 6 as a person receives more of a good, the additional utility from each additional unit of the good declines |
front 7 sunk costs | back 7 costs that were incurred in the past and cannot be recovered |
front 8 Sunk costs teaches us to | back 8 ignore past errors and make decisions based on what will happen in the future |
front 9 Production possibilities frontier | back 9 a diagram that shows the productively efficient combinations of two products that an economy can produce given the resources it has available. |
front 10 Slope | back 10 shows the opportunity cost |
front 11 Law of diminishing returns | back 11 as additional increments of resources to producing a good or services is added, the marginal benefit from those additional increments will decline |
front 12 Productive efficiency | back 12 when it is impossible to produce more of one good without decreasing the quantity produced of another good service |
front 13 Allocative efficiency | back 13 when the mix of goods produced represents the mix that society most desires |
front 14 Comparative advantage | back 14 when a country can produce a good at a lower opportunity cost than another country |
front 15 Invisible hand term | back 15 concept that individuals self interested behavior can lead to positive social outcomes |