Econ 202 From Luke
Opportunity cost- The highest-valued alternative that must be given up to engage in
an activity.
Market - A group of buyers and sellers of a good or service and the institution or
arrangement by which they come together to trade.
Production possibilities frontier (PPF) -A curve showing the maximum attainable
combinations of two products that may be produced with available resources and
current technology.
Opportunity cost - The highest-valued alternative that must be given up to engage
in an activity.
Marginal- small incremental change
Factors of Production
Labor
Capital
Natural resources
Entrepreneurship
Utility -The enjoyment or satisfaction people receive from consuming goods and
services.
Marginal utility (MU) - The change in total utility a person receives from
consuming one additional unit of a good or service.
Elasticity- A measure of how much one economic variable responds to changes in
another economic variable.
Price elasticity of demand - The responsiveness of the quantity demanded to a
change in price, measured by dividing the percentage change in the quantity
demanded of a product by the percentage change in the product’s price.
Δ
Δ
Change in value on the vertical axis y Rise
Slope
Change in value on the horizontal axis x Run
($12 $14) 2 0.2
(65 55) 10
Δ
Δ
Price of pizza
Slope
Quantity of pizza
