Opportunity Cost Flashcards
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Questions and Answers

What is the definition of profit?

  • total revenue
  • revenue minus costs (correct)
  • revenue plus costs
  • costs divided by revenue
  • What is the definition of opportunity cost?

    The item or opportunity forgone by a choice

    On a production possibility curve, data points that fall outside of the curve represent?

    Unobtainable production

    What does scarcity force all people and groups to do?

    <p>Make choices</p> Signup and view all the answers

    What is the amount of money you are not earning at work by staying in school?

    <p>Opportunity cost</p> Signup and view all the answers

    What does inefficiency refer to in production possibilities?

    <p>A spot on the inside of the production possibilities curve</p> Signup and view all the answers

    What is a graphical representation of the combination of goods and services?

    <p>Production Possibility Curve</p> Signup and view all the answers

    Assessing opportunity cost involves?

    <p>Making choices and dealing with consequences</p> Signup and view all the answers

    What is a shortage?

    <p>Uncontrollable or intentional stoppage of production</p> Signup and view all the answers

    What is marginal thinking?

    <p>Considering the impact of the next unit of production</p> Signup and view all the answers

    What does growth refer to in terms of the production possibilities curve?

    <p>A rightward movement of the production possibilities curve</p> Signup and view all the answers

    Producers can create any combination of goods they wish, as long as they?

    <p>Properly allocate resources</p> Signup and view all the answers

    What is the definition of revenue?

    <p>The total amount of money earned through the sales of a good or service</p> Signup and view all the answers

    Opportunity cost occurs because of a producer's need to?

    <p>Allocate resources</p> Signup and view all the answers

    Which of the following lists what we sacrifice by making a choice?

    <p>What we sacrifice by making a choice</p> Signup and view all the answers

    Study Notes

    • Profit: The surplus obtained from revenues after deducting all associated costs.
    • Opportunity Cost: The value associated with the next best alternative that is forgone when making a choice.
    • Scarcity: A fundamental economic problem resulting from limited resources that compels individuals and societies to make decisions.
    • Shortage: A temporary condition where the supply of a good or service is insufficient to meet demand, resulting from factors that can be uncontrollable or deliberate.

    Production and Efficiency

    • Production Possibility Curve (PPC): A graphical tool depicting various combinations of goods and services that can be produced with available resources and technology.
    • Unobtainable Production: Points beyond the PPC indicate production levels that cannot currently be achieved given the available resources.
    • Inefficiency: Represented by points inside the PPC, indicating underutilization of resources.
    • Growth: An outward shift of the PPC signifies an increase in an economy's capacity to produce goods and services.

    Decision-Making and Resource Allocation

    • Marginal Thinking: Analyzing the additional benefits versus the costs of producing one more unit of a good or service.
    • Resource Allocation: The process producers use to distribute resources effectively among different goods and services to meet economic demands.
    • Assessing Opportunity Cost: Involves evaluating choices and understanding the trade-offs and potential consequences of those choices.

    Revenue and Financial Implications

    • Revenue: The total earnings generated from the sales of products or services before any expenses are deducted.
    • Implication of Staying in School: Opportunity cost is exemplified by incomes forgone when a student opts for education over immediate employment, representing a significant decision in personal finance.

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    Description

    Test your understanding of key economic concepts with these flashcards focused on opportunity cost and related terms. Each card defines crucial vocabulary that plays a role in decision-making and economic theory. Perfect for students or anyone looking to enhance their knowledge in economics.

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