Economics, Chapter 1, Section 2: Opportunity Cost – Flashcards
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Trade-off
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giving up onw benefit in order to gain a greater benefit
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Opportunity Cost
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the most desirable alternative given up as a result of a decision
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Marginal Cost
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the extra cost of adding one unit
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Cost/Benefit Analysis
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deciding by thinking at the margin
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Decision-Making Grid
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a visual way of examining opportunity cost
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Guns or Butter
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the idea that a government must decided to produce more or less military or consumer goods
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If you choose between two summer jobs, the one you do not choose is the ________ of your decision.
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Opportunity Cost
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Making a decision at the margin is possible only in situations where
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the available alternatives can be divided into increments
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Every decision involves trade-offs because
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Everyone's resources are limited
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A decision is made at the margin when each alternative considers
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cost and benefit ranked in progressive units
