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9 Cards in this Set

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What is absolute advantage?
One person has an absolute advantage over another if he or she takes fewer hours to perform a task than the other person.
What is Comparative Advantage?
One person has a comparative advantage over another if his or her opportunity cost of performing a task is lower than the other person's opportunity cost.
What is the Principle of comparative advantage?
Everyone does best when each person (or country) concentrates on the activities for which his or her opportunity cost is lowest.
What is the production possibilities curve?
A graph that describes the maximum amount of one good that can be produced for every possible level of production of the other good.
Whats an attainable point?
any combination of goods that can be produced using currently available resources.
What is an unattainable point?
Any combination of goods that cannot be produced using currently available resources.
What is an Inefficient point?
Any combination of goods for which currently available resources enable an increase in the production of one good without a reduction in the production of the other.
What is an efficient point?
Any combination of goods for which currently available resources do not allow an increase in the production of one good without a reduction in the production of the other.
What is the principle of increasing opportunity cost? (Also called "the Low-Hanging-Fruit principle")
In expanding the production of any good, first employ those resources with the lowest opportunity cost and only afterward turn to resources with higher opportunity costs.