Chapter 2 - Gains In Specialization And Exchange

Question 1

Resources or Inputs used to produce goods are classified in these 3 groups

Answer 1

Labor, capital, and natural resources

Question 2

Labor

Answer 2

Not only the actual number of bodies physically able to do work but also the quality of the labor services provided. Investments in training or education that increase the productivity of labor increase the capabilities for production in an economy.

Question 3

Capital

Answer 3

Buildings, machinery, roads, and other man made or produced resources that can be used to produce other goods

Question 4

Natural resources

Answer 4

Not only oil, natural gas, coal, and tin that come from the ground, but also the land itself

Question 5

Production possibility frontier

Answer 5

Defines the various production opportunities open to an individual or an economy given full employment of resources and existing technology

Question 6

Marginal cost

Answer 6

Of a good or activity is the amount of other goods that must be forgone to obtain one more unit of the good.

Question 7

Absolute advantage

Answer 7

Individual has this in the production of a good if that individual can produce more than others in the same time or can produce the same output as others in less time

Question 8

Comparative advantage

Answer 8

An individual has this When that individual can produce the good at a lower cost than others.

Question 9

Production efficiency

Answer 9

A level of production is achieved at the least cost