Ch 2 Comparative Advantage

Question 1

Absolute advantage

Answer 1

One person has an absolute advantage over another if he or she takes fewer hours to perform a task than the other person

Question 2

Unattainable point

Answer 2

Any combination of goods that cannot be produced using currently available resources

Question 3

Comparative advantage

Answer 3

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

Question 4

Attainable point

Answer 4

Any combination of goods that can be produced using currently available resources

Question 5

Efficient point

Answer 5

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

Question 6

Inefficient point

Answer 6

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

Question 7

Production possibilities curve

Answer 7

A graph that describes the maximum amount of one good that can be produced for every possible level of production of the other good

Question 8

Outsourcing

Answer 8

A term increasingly used to connote having services performed by low-wage workers overseas