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14 Cards in this Set
- Front
- Back
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Disagreements among economists occur most commonly in:
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normative economics
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Do economists agree on much of economic theory?
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yes
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What is an example of a free good?
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a wino's lunch, dug from the trash
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An economy suffers from production inefficiency if:
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costs could be reduced by using resources differently
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fee simple property rights
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the broadest of property rights
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socialism
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government acts as a trustee over nonhuman resources jointly owned by all citizens
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production-possibilities frontier (PPF)
What are the 3 assumptions of a PPF? |
shows maximum combinations of goods a society can produce
3 assumptions: 1) fixed resources, 2) constant technology, 3) full and efficient employment of all scarce resources |
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comparative advantage
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guide to EFFICIENT SPECIALIZATION -- You gain by specializing in production where opportunity costs are lowest and trading your output for things other people can produce for a lower opportunity cost
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Increasing a particular form of production invariably leads to...
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DIMINISHING RETURNS and
INCREASING OPPORTUNITY COSTS |
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Output sand consumption rise when comparative advantage guides us into areas of ______ in which our opportunity costs are relatively low.
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specialization
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If the current output combination is inside the production possibilities curve, some resources are __________.
Points outside the PPF are ________. |
underemployed; unattainable
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A typical production possibilities curve is concave from its origin because of _________ opportunity costs.
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increasing
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The costs of producing any good eventually rise as output is expanded because __________ returns are encountered.
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diminishing
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Diminishing returns are encountered along a PPF because resources are _______ and tend to be relatively _________ for different forms of production.
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specialized; suited
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