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
