Chapter 2 Economic Models Flashcards
1
Q
PPF
A
maximum quantity of one good that can be produced for any given production of the other
2
Q
comparative advantage
A
opportunity cost of producing a good is lower for that person than it is for the other
3
Q
absolute avantage
A
an individual can make more of something than the other can
4
Q
circular flow diagram
A
Households
Market goods/services Factor
Firms (supply chain)
5
Q
positive economics
A
the way the economy actually works
6
Q
normative economics
A
the way the economy should work
7
Q
Why economists disagree
A
- normative value judgements
2. assumption in a model
