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21 Cards in this Set

  • Front
  • Back
Coordination Problems of an Economy
1) What, and how much, to produce
2) How to produce it
3) For whom to produce it
production possibility table
a table that lists a choice's opportunity costs by summarizing what alternative outputws you can achieve with your inputs
a result of an activity
what you put into a production process
production possiblity curve
a curve measuring the maximum combination of outputs that can be obtained from a given number of inputs
PPC summary
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
comparative advantage
the abiltiy to be better suited to the production of one good than to the production of another good
principal of increasing marginal opportunity cost
In order to get more of something, one must give up ever-increasing quantities of something else
productive efficienty
achieving as much output as possible from a given amount of inputs or resources
getting less output from inputs that, if devoted to some other activity, would produce more output
achieving a goal useing as few inputs as possible
an economic policy of leaving coordination of indiiduals' actions to the market
the relocation of production once done in the United States to foreign countries
the relocation of production done abroad to the United States
law of one price
the wages of workers in one country will not differ significantly from the wages of (equal) workers in another similar country
roles of government in restricting trade
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
the effect of a decision on a third party not taken into account by the decision maker
public good
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
private good
a good that, when consumed by one individual, cannot be consumed by another individual
demerit goods or activities
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)
government failures
situations in which the government intervenes and makes things worse