Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
10 Cards in this Set
- Front
- Back
|
Comparative advantage |
One person has comparative advantage over another in the task if his or her opportunity cost of performing a task is lower than the other person's opportunity cost. |
|
|
Absolute advantage |
One person has absolute advantage over another if an hour spent in performing a task earns more than the other person can earn in an hour at the task. |
|
|
The Principle of Comparative Advantage |
Everyone does best when each person (or each country) concentrates on the activities for which his or her opportunity cost is the lowest. |
|
|
Production possibilities curve (PPC) Production possibilities frontier (PPF) |
A graph that describes the maximum amount of one good that can be produced for every possible level of production of the other good. |
|
|
Attainable point |
Any combination of goods that can be produced using currently available resources. |
|
|
Unattainable point |
Any combination of goods that cannot be produced using currently available resources. |
|
|
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. |
|
|
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. |
|
|
The Principle of Increasing Opportunity Cost (The-Low-Hanging-Fruit Principle) |
In expanding the production of any good, first employ those resources with the lowest opportunity cost, and only afterwards turn to resources with higher opportunity costs. |
|
|
Scarcity Principle |
States that the only way a consumer can get more of one good is to settle with less for another. |
