{"id":109,"date":"2016-07-19T18:00:47","date_gmt":"2016-07-19T18:00:47","guid":{"rendered":"https:\/\/pressbooks.ccconline.org\/accmacro\/chapter\/glossary-choice-in-a-world-of-scarcity\/"},"modified":"2023-07-15T00:14:33","modified_gmt":"2023-07-15T00:14:33","slug":"glossary-choice-in-a-world-of-scarcity","status":"publish","type":"chapter","link":"https:\/\/pressbooks.ccconline.org\/accmacro\/chapter\/glossary-choice-in-a-world-of-scarcity\/","title":{"raw":"Glossary: Choice in a World of Scarcity","rendered":"Glossary: Choice in a World of Scarcity"},"content":{"raw":"

allocative efficiency <\/strong>when the mix of goods being produced represents the mix that society most desires<\/p>\r\n

assumption of rationality<\/strong> the assumption that people will make choices in their own self-interest, choosing things that provide the greatest personal benefit and\u00a0foregoing those that aren\u2019t as personally valuable and compelling; also called the theory of rational behavior<\/em><\/p>\r\n

budget constraint<\/strong> all possible combinations of goods that someone can afford, given the prices of goods, when all income (or time) is spent<\/p>\r\n

comparative advantage<\/strong> the ability of a group or country to produce a good or service at a lower opportunity cost than another group or country<\/p>\r\n

law of diminishing returns<\/strong> as additional increments of resources are devoted\u00a0to a certain purpose, the marginal benefit from those additional increments will decline<\/p>\r\nmarginal analysis<\/strong> comparing the costs and benefits of a little more or a little less\r\n\r\nmarginal benefit<\/strong> is the difference (or change) in what you receive from a different choice\r\n\r\nmarginal cost<\/strong> the difference (or change) in cost of a different choice\r\n\r\nnormative statements <\/strong>are subjective; they describe the world as it ought to be\r\n\r\nopportunity cost<\/strong> is the value of the next best alternative\r\n\r\npositive statements <\/strong>are objective; they describe the world as it is\r\n

production possibilities frontier (or curve)<\/strong> a diagram that shows the productively efficient combinations of two products that an economy can produce given the resources it has available<\/p>\r\n

productive efficiency<\/strong> when it\u2019s impossible to produce more of one good (or service) without decreasing the quantity produced of another good (or service)<\/p>\r\nsunk costs<\/strong>\u00a0costs that are\u00a0incurred in the past and can\u2019t be recovered","rendered":"

allocative efficiency <\/strong>when the mix of goods being produced represents the mix that society most desires<\/p>\n

assumption of rationality<\/strong> the assumption that people will make choices in their own self-interest, choosing things that provide the greatest personal benefit and\u00a0foregoing those that aren\u2019t as personally valuable and compelling; also called the theory of rational behavior<\/em><\/p>\n

budget constraint<\/strong> all possible combinations of goods that someone can afford, given the prices of goods, when all income (or time) is spent<\/p>\n

comparative advantage<\/strong> the ability of a group or country to produce a good or service at a lower opportunity cost than another group or country<\/p>\n

law of diminishing returns<\/strong> as additional increments of resources are devoted\u00a0to a certain purpose, the marginal benefit from those additional increments will decline<\/p>\n

marginal analysis<\/strong> comparing the costs and benefits of a little more or a little less<\/p>\n

marginal benefit<\/strong> is the difference (or change) in what you receive from a different choice<\/p>\n

marginal cost<\/strong> the difference (or change) in cost of a different choice<\/p>\n

normative statements <\/strong>are subjective; they describe the world as it ought to be<\/p>\n

opportunity cost<\/strong> is the value of the next best alternative<\/p>\n

positive statements <\/strong>are objective; they describe the world as it is<\/p>\n

production possibilities frontier (or curve)<\/strong> a diagram that shows the productively efficient combinations of two products that an economy can produce given the resources it has available<\/p>\n

productive efficiency<\/strong> when it\u2019s impossible to produce more of one good (or service) without decreasing the quantity produced of another good (or service)<\/p>\n

sunk costs<\/strong>\u00a0costs that are\u00a0incurred in the past and can\u2019t be recovered<\/p>\n","protected":false},"author":32,"menu_order":49,"template":"","meta":{"pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"class_list":["post-109","chapter","type-chapter","status-publish","hentry"],"part":23,"_links":{"self":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapters\/109","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/wp\/v2\/users\/32"}],"version-history":[{"count":1,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapters\/109\/revisions"}],"predecessor-version":[{"id":110,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapters\/109\/revisions\/110"}],"part":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/parts\/23"}],"metadata":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapters\/109\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/wp\/v2\/media?parent=109"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/pressbooks\/v2\/chapter-type?post=109"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/wp\/v2\/contributor?post=109"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/pressbooks.ccconline.org\/accmacro\/wp-json\/wp\/v2\/license?post=109"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}