Chapter 2 Key Concepts

Question 1

All things that give satisfaction

Answer 1

Goods

Question 2

A subset of goods which are scarce

Answer 2

Economic Goods

Question 3

Wants vs. Needs

Answer 3

There is no distinction in economics

Question 4

The value of the next best alternative foregone, also known as the economic cost

Answer 4

Opportunity Cost

Question 5

The boundary between all combinations of goods obtainable given current resources and the combination of goods unobtainable given their current resources

Answer 5

Production Possibilities Curve/Frontier

Question 6

Not fully utilizing resources, unemployment (PPC)

Answer 6

Inside the PPC

Question 7

Opportunity Cost (PPC)

Answer 7

Moving along the PPC

Question 8

Growth needed to achieve (PPC)

Answer 8

Outside the PPC

Question 9

Being able to produce more of a good then another agent

Answer 9

Absolute advantage

Question 10

Being able to produce a good at a lower opportunity cost

Answer 10

Comparative advantage

Question 11

Division of Labor - increases productivity by
1
2
3

Answer 11

1. People specializing in what they do best
2. People learning by doing
3. People not wasting time switching tasks