UTK: Economics 201 - Chapter 2

  1. Definition: the value of the best alternative forgone when an item or activity is chosen.
    Opportunity Cost
  2. Definition: a cost that has already been incurred, cannot be recovered, and thus is irrelevant for present and future economic decisions.
    Sunk Cost
  3. Definition: The individual, firm, region, or country with the lowest opportunity cost of producing a particular good should specialize in that good.
    Law of Comparative Advantage
  4. Definition: The ability to make something using fewer resources than other producers face.
    Absolute Advantage
  5. Definition: The ability to make something at a lower opportunity cost than other producers face.
    Comparative Advantage
  6. Definition: The direct exchange of one good for another without using money.
  7. Definition: Breaking down the production of a good into separate tasks.
    Division of Labor
  8. Definition: Focusing work effort on a particular product or a single task.
    Specialization of Labor
  9. Definition: A curve showing alternative combinations of goods that can be produced when available resources are used efficiently; a boundary line between inefficient and unattainable combinations.
    Production Possibilities Frontier (PPF)
  10. Definition: The condition that exists when there is no way resources can be reallocated to increase the production of one good without decreasing the production of another; getting the most from available resources.
  11. Definition: To produce more of one good.a successively larger amount of the other good must be sacrificed.
    Law of Increasing Opportunity Cost
  12. Definition: An increase in the economy's ability to produce goods and services; reflected by an outward shift of the economy's production possibilities frontier.
    Economic Growth
  13. Definition: The formal and informal institutions that support the economy-laws, customs, manners, conventions, and other institutional underpinnings that encourage people to pursue productive activity.
    Rules of the Game
  14. Definition: The set of mechanisms and institutions that resolve the what, how and for whom questions.
    Economic System
  15. Definition: An economic system characterized by the private ownership of resources and the use of prices to coordinate economic activity in unregulated markets.
    Pure Capitalism
  16. Definition: An owner's right to use, rent, or sell resources or property.
    Private Property Rights
  17. Definition: An economic system characterized by the public ownership of resources and centralized planning.
    Pure Command System
  18. Definition: An economic system characterized by the private ownership of some resources and the public ownership of other resources; some markets are regulated by government.
    Mixed System
Card Set
UTK: Economics 201 - Chapter 2
Different approach this time