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14 Cards in this Set

  • Front
  • Back
Production possiblities frontier (PPF)
represents the possible combinations of the two goods that can be produced in a certain period of time, under the conditions of a given state of technology and fully employed resources
Law of increasing opportunity costs
as more of a good is produced, the opportunity costs of producing that good increase
Productive efficiency
the situation that exists when a firm produces its output at the lowest possible per unit cost (lowest ATC)
Productive inefficiency
the condition where less than the maximum output is produced with given resources and technology. productive inefficiecny implies that more of one good can be produced without any less of another good being produced
the body of skills and knowledge concerning the use of resources in production. an advance in technology commonly refers to the ability to produce more output with a fixed amount of resources or the ability to produce the same output with fewer resources
Trade (exchange)
the process of giving up one thing for something else
Ex ante
phrase that means "before" as in before a trade
Ex post
phrase that means "after" as in after a trade
Terms of trade
how much of one thing is given up for how much of something else
Transaction costs
the costs associated with the time and effort needed to search out, negotiate, and consummate an exchange
Comparative advantage
the situation where a country can produce a good at lower opportunity costs than another country can
Economic system
the way in which society decides to answer key economic questions - in particular those questions that relate to production and trade
Mixed capitalism
an economic system characterized by largely private ownership of factors of production, market allocation of resources, and decentralized decision making. most economic activities take place in the private sector of this system, but government plays a substantial economic and regulatory role
Property rights
refer to the laws, regulations, rules, and soical customs that define what an individiual can and cannot do in society