Chapter 2 Flashcards
Production Possibilities Frontier (ppf)
- a curve showing the maximum attainable combinations of two goods that can produced with available resources and current technology
- illustrates choice, scarcity and opportunity costs; shows all available combinations
2 Sources of Economic Growth
accumulation of capital and technological advancement; the ppf shifts outward
Economic Capital
goods that are themselves produced and then are used to produce other good and services; ie. machines, computers; anything that a firm would buy
Resources
- the inputs that go into the process of production
- 3 main resources: land, labor and capital (L,L,K)
Absolute Advantage
ability to produce a good or service using fewer inputs than another producer; look at good; Adam Smith
Comparative Advantage
Ability to produce a good at a lower opportunity cost than another producer; look at producers; David Ricardo
Firm
- a business organization, such as a corporation, limited liability company or partnership, that sells goods or services to make a profit; primary producing units in an economy
- supply output and demand input
Entrepreneur
someone who operates a business, bringing together the factors of production-labor, capital and natural resources-to produce goods and services
Innovation
a new method, idea, product, etc.
Technology
the application of scientific knowledge for practical purposes, especially in industry;
machinery and equipment developed from the application of scientific knowledge.
Goods
merchandise or possessions
Services
the action of helping or doing work for someone
Revenue
income
Household
- any number of people that share a home, primary consuming units in an economy
- demand output and supply input
Factors of Production
Land, Labor, Capital
Capital
wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing
Human Capital
the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country
Production
Process of transforming scarce resources into useful goods and services; the art of transforming inputs into outputs
Output Market
market for goods/ services
Input Market
market for land, labor and capital (L,L,K)
