Econ Exam I- Chapter 2

  1. PPF:
    curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology
  2. all points on the frontier or inside are
  3. combinations on the frontier are
  4. combinations inside the frontier are
  5. points beyond the frontier are
  6. as the economy moves down the PPF it experiences
    increasing marginal opportunity
  7. the idea of increasing marginal opportunity cost illustrates that the
    more resources already devoted to an activity, the smaller payoff to devoting additional resources to that activity
  8. economic growth:
    the ability of the economy to increase the production of goods and services
  9. trade:
    the act of buying and selling
  10. benefit of trade:
    people become better off by increasing both production and consumption
  11. absolute advantage:
    ability of an individual, firm, or country to produce more of a good or service than competitors using the same amt of resources
  12. comparitive advantage:
    the ability to produce a good or service at a lower opportunity cost than competitors
  13. the basis for trade is
    comparative advantage
  14. households are
    suppliers of factors of production-like labor---make goods or services
  15. firms are
    suppliers of goods and services --buy factors of production
  16. free market:
    few government restrictions on how a G or S can be produced or sold
  17. the father of modern econ:
    adam smith
  18. comparatve advantage is the determinant
    of exports and imports in ideal markets
  19. absolute advantage is important for
    productivity differences and real income across countries
Card Set
Econ Exam I- Chapter 2