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Opportunity cost is the concept of ensuring efficient use of scarce resources, [25] a concept that is central to health economics. The massive increase in the need for intensive care has largely limited and exacerbated the department's ability to address routine health problems.
Production–possibility frontier. In microeconomics, a production–possibility frontier (PPF), production possibility curve (PPC), or production possibility boundary (PPB) is a graphical representation showing all the possible options of output for two goods that can be produced using all factors of production, where the given resources are ...
The parable of the broken window was introduced by French economist Frédéric Bastiat in his 1850 essay "That Which Is Seen, and That Which Is Not Seen" (" Ce qu'on voit et ce qu'on ne voit pas ") to illustrate why destruction, and the money spent to recover from destruction, is not actually a net benefit to society.
Opportunity cost is also often defined, more specifically, as the highest-value opportunity forgone. So let's say you could have become a brain surgeon, earning $250,000 per year, instead of a ...
In macroeconomics, the guns versus butter model is an example of a simple production–possibility frontier. It demonstrates the relationship between a nation's investment in defense and civilian goods. The "guns or butter" model is used generally as a simplification of national spending as a part of GDP. This may be seen as an analogy for ...
Opportunity Cost Examples. Opportunity cost can also be considered as the value of the resource in its next best use or next highest-valued alternative. Here are some examples to help better ...
Comparative advantage in an economic model is the advantage over others in producing a particular good. A good can be produced at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. [1] Comparative advantage describes the economic reality of the gains from trade for individuals, firms, or ...
An example that combines features above is a country that specialises in the production of high-tech knowledge products, as developed countries do, and trades with developing nations for goods produced in factories where labour is relatively cheap and plentiful, resulting in different in opportunity costs of production.