BUSS1040 Study Guide - Final Guide: High High, Absolute Advantage, Diminishing Returns

• School: University of Sydney
• Department: Business Studies
• Course: BUSS1040
• Professor: All

Document Summary

Absolute advantage: the ability of an individual, firm or country to produce more of a good or service than competitors using the same amount of resources. Allocative efficiency: when production reflects consumer preferences; in particular, every good or service is produced up to the point where the last unit produces a marginal benefit to consumers equal to the marginal cost of producing it. Comparative advantage: the ability of an individual, firm or country to produce a good or service at a lower opportunity cost than other producers. Constant returns to scale: (cid:449)he(cid:374) a fi(cid:396)(cid:373)(cid:859)s lo(cid:374)g-run average costs remain unchanged as it increases it scale of production and the quantity of output. Consumer surplus: the difference between the highest price a consumer is willing to pay and the price the consumer actually pays (net benefit) Cooperative equilibrium: an equilibrium in a game in which players cooperate to increase their mutual payoff.