Econ 2106 Flashcards
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Questions and Answers

What do people have in economics?

  • Unlimited economic wants
  • Limited resources
  • Both A and B (correct)
  • None of the above
  • What is one major part of the opportunity costs of one's decision to go to college?

    full-time job that one could have gotten instead of going to college

    What does economic analysis assume about behavior?

    rational or purposeful behavior

    How can marginal cost be defined?

    <p>change in cost resulting from one more unit of production</p> Signup and view all the answers

    Jane's opportunity cost of producing 1 pound of corn is ______ pound(s) of green beans.

    <p>1</p> Signup and view all the answers

    What does it mean if an individual has a comparative advantage in the production of a good?

    <p>has the lowest opportunity cost in the production of the good</p> Signup and view all the answers

    Sophie and Ruby agree on a price of $45 for a used economics textbook. The gains from trade for Sophie equals ______ and the gains from trade for Ruby equals _______.

    <p>$15, $15</p> Signup and view all the answers

    Study Notes

    Economic Wants vs. Resources

    • Individuals possess unlimited economic wants, yet face constraints due to limited resources.

    Opportunity Cost of Education

    • A significant component of the opportunity cost when choosing college post-high school is the income from a full-time job foregone.

    Rational Economic Behavior

    • Economic analysis is based on the assumption that people act rationally, aiming to make decisions that enhance their overall well-being.

    Definition of Marginal Cost

    • Marginal cost is defined as the incremental change in cost associated with producing one additional unit of output.

    Opportunity Cost in Production

    • Jane's opportunity cost for producing 1 pound of corn is equivalent to the production of 1 pound of green beans.

    Comparative Advantage

    • When an individual holds a comparative advantage in production, they have the lowest opportunity cost associated with producing that good.

    Gains from Trade Example

    • In a transaction where Sophie sells her economy textbook for $45 (her willingness to sell being $30 and Ruby's willingness to pay $60), both Sophie and Ruby realize a gain from trade of $15 each.

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    Description

    Test your knowledge with these flashcards for Econ 2106! They cover key concepts such as opportunity costs and rational behavior in economics. Challenge yourself and enhance your understanding of essential economic principles.

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