Chapter 2 Flashcards
1
Q
Opportunity cost
A
The best alternative that we give up or forgo, when we make a choice or decision
2
Q
comparative advantage
A
Ricardo’s theory, specialization and free trade will benefit all trading parties, when produce a product at lower Opportunity Cost
3
Q
absolute advantage
A
absolute advantage when can produce a product using fewer resources
4
Q
Production possibilities frontier
A
Graph showing all combinations of goods and services that a society can produce efficiently
5
Q
Marginal Rate of Transformation (MRT)
A
Slope of PPF. Smallest slope = smallest opportunity cost, so if multiple country ppf, smallest slope goes first
6
Q
economic growth
A
increase in total OUTPUT of economy, when a society acquires new resources
