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economics
Term | Definition |
---|---|
opportunity cost | the value of the next highest valued alternative use of resource |
incentive | any factor that encourages or motivates a person to do something |
The mantra of economics | people make choices with scarce resources, and they interact with others when they make these choices |
Microeconomics | examines the behavior and decisions of individual firms and households and the way they interact in specific industries and markets. |
Gains from trade | improvements in income, production, or satisfaction owing to the exchange of goods and services. |
Specialization | when people or countries can concentrate on the items that can be produced most efficiently. |
Division of labor | allows individuals to perform the tasks they do best. Specialization + Division of labor= |
Comparative advantage | when one person or group can produce one good at a lower opportunity cost |
Law of diminishing utility | when the quantity of something goes up the utility goes down |