The Economic Problem

When goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.

Of a good is the opportunity cost of producing an additional unit of it.

It is the benefit obtained by producing one more unit of the same good

Any choice made from the FPP implies an exchange

It is the highest value alternative that is sacrificed

It is the reduction of the quantity produced of a goodthe increase of the quantity produced of another good

There are two ways to coordinate the market for the production of goods and services.

produce one or two services or goods and trade others with other people