Chapter 2: Trads Offs, Comparative Advanatges, And The Market System Flashcards Preview

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Flashcards in Chapter 2: Trads Offs, Comparative Advanatges, And The Market System Deck (15)
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1
Q

Production possibilities frontier (PPF)

A

A curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology

2
Q

Opportunity cost

A

The highest valued alternative that must be given up to engage in activity.

School, work, sleep, drink

If I go to work school, my opportunity cost Is missing work

3
Q

Allocative efficiency

A

A state of the economy in which production is in accordance with consumer preferences; in particular, every good or service is produced up to the point where the last unit provides a marginal benefit to society equal to the marginal cost of producing it

4
Q

Economic growth

A

The ability of an economy to produce increasing quantities of goods and services

5
Q

Trade

A

The act of buying and selling

6
Q

Absolute advantage

A

The ability of an individual, a firm, or a country to produce more of a good or service than potential trading partners, using the same amount of resources

7
Q

Comparative advantage

A

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than potential trading partners

8
Q

Market

A

A group of buyers and sellers of a good or service and the institutions or arrangements by which they come together and trade

9
Q

Product market

A

A market for goods, such as computers

Or services, such as haircuts

10
Q

Factor market

A

A market for the factors of production, such as labour, capital, natural resources, and entrepreneurial ability

11
Q

Entrepreneur

A

Someone who operates a business, bringing together factors of production, labour, capital, and natural resources, to produce goods and services

12
Q

Circular flow diagram

A

A model that illustrates how participants in markets are linked

13
Q

Free market

A

A market with few government restrictions on how goods/ services, can be produced or sold, on who can buy or sells food and services, or on how factors of production can be employed

14
Q

Property rights

A

The rights individuals or firms have to the exclusive use of their property, including rights to buy or sell it

15
Q

Factors of population

A

The inputs used to make goods and services