Chapter Ii

Front 1

Coordination Problems of an Economy

Back 1

1) What, and how much, to produce
2) How to produce it
3) For whom to produce it

Front 2

production possibility table

Back 2

a table that lists a choice's opportunity costs by summarizing what alternative outputws you can achieve with your inputs

Front 3

output

Back 3

a result of an activity

Front 4

input

Back 4

what you put into a production process

Front 5

production possiblity curve

Back 5

a curve measuring the maximum combination of outputs that can be obtained from a given number of inputs

Front 6

PPC summary

Back 6

1) there is a limit to what you can acheive, given existing institutions, resources, and techonology
2) every choice you make has an opportunity cost. you can get more of something only by giving up something else

Front 7

comparative advantage

Back 7

the abiltiy to be better suited to the production of one good than to the production of another good

Front 8

principal of increasing marginal opportunity cost

Back 8

In order to get more of something, one must give up ever-increasing quantities of something else

Front 9

productive efficienty

Back 9

achieving as much output as possible from a given amount of inputs or resources

Front 10

inefficiency

Back 10

getting less output from inputs that, if devoted to some other activity, would produce more output

Front 11

efficiency

Back 11

achieving a goal useing as few inputs as possible

Front 12

laissez-faire

Back 12

an economic policy of leaving coordination of indiiduals' actions to the market

Front 13

outsourcing

Back 13

the relocation of production once done in the United States to foreign countries

Front 14

insourcing

Back 14

the relocation of production done abroad to the United States

Front 15

law of one price

Back 15

the wages of workers in one country will not differ significantly from the wages of (equal) workers in another similar country

Front 16

roles of government in restricting trade

Back 16

1) providing a stable set of institutions and rules
2) promoting effective and workable competition
3) correcting for externalities
4) ensuring economic stability and growth
5) providing public goods
6) adjusting for undesirable market results

Front 17

externality

Back 17

the effect of a decision on a third party not taken into account by the decision maker

Front 18

public good

Back 18

a good that if supplied to one person must be supplied to all and whose consumption by one individual does not prevent its consumption by another individual

Front 19

private good

Back 19

a good that, when consumed by one individual, cannot be consumed by another individual

Front 20

demerit goods or activities

Back 20

goods or activities that government believes are bad for people even though they choose to use the goods or engage in the activities (vs. merit)

Front 21

government failures

Back 21

situations in which the government intervenes and makes things worse