Understanding Marginal Analysis
If an economy is operating at a point inside the production possibilities curve, its resources are not being used efficiently. A point outside the production possibilities curve represents a combination of goods that is: unattainable.
Secondly, which is especially useful for comparing data? Comparing Line Graphs, Pie Charts, and Bar Graphs Bar graphs are especially useful when comparing quantities. Line graphs are widely used in economics to present continuous data about prices, wages, quantities bought and sold, the size of the economy.
Beside above, what describes the value of what you decide to give up when you make an economic choice?
The opportunity cost of a choice is the value of the best alternative given up. Scarcity is the condition of not being able to have all of the goods and services one wants. Choices involve trading off the expected value of one opportunity against the expected value of its best alternative.
What are economics referring to when they say choosing is refusing?
trade-off. marginal thinking. overnment decisions involve trade-offs between military and domestic needs.
What are three things a PPC shows?
The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions.
What are the three basic questions faced by every economy?
Because ALL economic resources are scarce, every society must answer three questions: What goods and services should be produced? How should these goods and services be produced? Who consumes these goods and services?
How do you calculate comparative advantage?
Taking this example, if countries A and B allocate resources evenly to both goods combined output is: Cars = 15 + 15 = 30; Trucks = 12 + 3 = 15, therefore world output is 45 m units. It is being able to produce goods by using fewer resources, at a lower opportunity cost, that gives countries a comparative advantage.
Which best describes the invisible hand concept?
The invisible hand refers to the: notion that, under competition, decisions motivated by self-interest promote the social interest. The invisible-hand concept suggests that: when firms maximize their profits, society’s output will also be maximized.
What does a production possibilities curve represent?
A production possibility curve measures the maximum output of two goods using a fixed amount of input. Each point on the curve shows how much of each good will be produced when resources shift from making more of one good and less of the other. The curve measures the trade-off between producing one good versus another.
What factors cause economic growth?
Six Factors That Affect Economic Growth Natural Resources. The discovery of more natural resources like oil, or mineral deposits may boost economic growth as this shifts or increases the country’s Production Possibility Curve. Physical Capital or Infrastructure. Population or Labor. Human Capital. Technology. Law.
What you give up when you make one choice over another?
To an economist, cost is the cost of what you give up when one choice is made over another. This is known as “opportunity cost.” This could mean money, time, or resources either now or in the future.
What is opportunity cost simple words?
Opportunity cost. From Wikipedia, the free encyclopedia. Opportunity cost is the value of the next best thing you give up whenever you make a decision. It is “the loss of potential gain from other alternatives when one alternative is chosen”.
What is the problem of choice?
Problem of choice refers to the allocation of various scarce resources which have alternative uses that are utilized for the production of various commodities and services in the economy for the satisfaction of unlimited human wants.
When you make an economic choice the value of the next best alternative the one you pass up is called?
A good is scarce if the choice of one alternative requires that another be given up. The existence of alternative uses forces us to make choices. The opportunity cost of any choice is the value of the best alternative forgone in making it.
What should be included in determining the opportunity cost of an action?
An opportunity cost is defined as the value of a forgone activity or alternative when another item or activity is chosen. Opportunity cost comes into play in any decision that involves a tradeoff between two or more options. It is expressed as the relative cost of one alternative in terms of the next-best alternative.
How does opportunity cost influence decision making?
Every time you make a choice, you’re weighing the opportunity cost of that action. Opportunity costs extend beyond just the monetary costs of a decision, but it includes all real costs of making one choice over another, including the loss of time, energy and a derived pleasure/utility.