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Productive efficiency is achieved when
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firms produce goods and services at the lowest price.
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Marginal revenue
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the money received from the sale of an additional good or service
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Area of a triangle
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A= 1/2 base x height
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Percentage Change
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formula: (old value- new value)/ old value
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Marginal analysis
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the examination of the additional benefits of an activity compared to the additional costs incurred by the same activities.
until its marginal benefits equal marginal costs.
until its marginal benefits equal marginal costs.
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Scarcity
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refers to the situation in which unlimited wants exceed limited resources.
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Normative statement
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expresses a value judgment about whether a situation is desirable or undesirable. It looks at the world as it "should" be.
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Markets promote
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competition and voluntary exchange.
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Trade-off
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The idea that because of scarcity, producing more of one good or service means producing less of another good or service refers to the economic concept of
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Macroeconomics
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the study of the economy as a whole.
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Economics assumes that economics agents behave
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Rationally, meaning they make the best decisions given their knowledge of the cost and benefits
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Two-dimensional graphs
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have a horizontal and vertical axis and are used in economics to illustrate relationships between two economics variables.
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Marginal cost
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the extra cost associated with undertaking an activity.
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Opportunity cost
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the highest value alternative that must be given up to engage in an activity.
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Economics
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the study of the choice people make to attain their goals, given scarce resources.
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Marginal
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additional or extra
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Positive statement
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a statement that can be proved or disproved. Supported with facts.
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Microeconomics
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The study of how households and firms make choices
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Making optimal decisions "at the margin" requires
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Weighing the costs and benefits of a decision before deciding if it should be pursued.
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Allocative efficiency
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the state in which production represents consumer preferences; every good or service is produced up to the point where the last unit provides a marginal benefit to consumers equal to the marginal cost of producing. `
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