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9 Cards in this Set
- Front
- Back
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Economic Model
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a simplified version of a real situation for purposes of greater understanding, types: 1. small economy 2. computer simulation 3. thought experiment
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Other things equal assumption
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means that all relevant factors remain unchanged within an economic model
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Production possibility frontier
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a graph of the opportunity cost involving two products ex pg 23
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Comparative Advantage
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when the opportunity cost of one product is less than another workers.
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Absolute Advantage
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when the worker has a higher productivity rate in a given task
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Circular flow diagram
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a diagram of the exchange of cash and goods and services
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Factor markets
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a market of resources required in the process of production
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Positive economics
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(description) branch of analysis that describes how the economy work with definitive answers, numbers, rates
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Normative Economics
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(prescription)branch of analysis that describes what should be
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