Hockey Stick Growth Long time no progress → suddenly rapid, steady economic
improvement forever after
Production Function A graphical or mathematical description of the relationship
between input quantities and the amount of output produced.
Opportunity Cost The value of the next best alternative that must be foregone
when making a choice.
Economic Rent Economic Rent = Total Benefit (Happiness Value) − Opportunity 1. Positive (+)
Cost Choose. Gain more
than lose
2. Zero (0)
g
Doesn’t matter.
3. Negative (-)
Don’t choose. Lose
more than gain
fro
Absolute Advantage
Comparative
Advantage
Nash Equilibrium
Social Dilemma
When one party is more productive at producing all goods or
performing all tasks compared to another party.
When a party can produce a good at a lower relative
opportunity cost than another party.
Best choice of game theory
Selfish individual choices = bad collective result
ol
Pareto Efficient You cannot make one person happier without making someone
else worse off.
MRS How much of one thing you’re okay to give up, to get more of
another and still stay equally happy
el
MRT The amount of one good a country/economy has to give up to
make one more unit of another good
Innovation Rent Profit change or cost change from switching to new technology
th
APL Total Output / Number of Workers.
Marginal Product Δ in Output / Δ in Input represents the slope
of the production
function
Economic Cost Actual money spent + Opportunity Cost
Economic Rent Benefit of your chosen choice − Benefit of the next best
alternative
Total Cost (Firm) (Wage × Workers) + (Capital Price × Machines)
Isocost Line m = (Total Cost ÷ Capital Price) − (Wage ÷ Capital Price) ×
improvement forever after
Production Function A graphical or mathematical description of the relationship
between input quantities and the amount of output produced.
Opportunity Cost The value of the next best alternative that must be foregone
when making a choice.
Economic Rent Economic Rent = Total Benefit (Happiness Value) − Opportunity 1. Positive (+)
Cost Choose. Gain more
than lose
2. Zero (0)
g
Doesn’t matter.
3. Negative (-)
Don’t choose. Lose
more than gain
fro
Absolute Advantage
Comparative
Advantage
Nash Equilibrium
Social Dilemma
When one party is more productive at producing all goods or
performing all tasks compared to another party.
When a party can produce a good at a lower relative
opportunity cost than another party.
Best choice of game theory
Selfish individual choices = bad collective result
ol
Pareto Efficient You cannot make one person happier without making someone
else worse off.
MRS How much of one thing you’re okay to give up, to get more of
another and still stay equally happy
el
MRT The amount of one good a country/economy has to give up to
make one more unit of another good
Innovation Rent Profit change or cost change from switching to new technology
th
APL Total Output / Number of Workers.
Marginal Product Δ in Output / Δ in Input represents the slope
of the production
function
Economic Cost Actual money spent + Opportunity Cost
Economic Rent Benefit of your chosen choice − Benefit of the next best
alternative
Total Cost (Firm) (Wage × Workers) + (Capital Price × Machines)
Isocost Line m = (Total Cost ÷ Capital Price) − (Wage ÷ Capital Price) ×
