Section 3: Economic Choices and Decision Making – Flashcards
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Trade-offs
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Alternatives that must be given up when one is chosen rather than another
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Opportunity cost
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Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
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Opportunity benefit
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The benefit of choosing an alternative over another
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Production Possibilities Frontier
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Diagram representing maximum combinations of goods and or services an economy can produce when all productive resources are fully employed
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Cost-benefit analysis
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Way of thinking that compares the cost of an action to its benefits
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Free enterprise economy
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Market economy in which privately owned buisnesses have the freedom to operate for a profit with limited government intervention
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Standard of living
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Quality of life based on ownership of necessities and luxeries that make life easier
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What does it mean to have all resources fully employed
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You are using all your resources effeciently and to their max
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What is a model and why are they useful?
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A model represents something and helps us make better decisions or explain something
