Chapter 2 - Thinking Like An Economist Flashcards
1
Q
Circular-flow diagram
A
A visual model of the economy, shows how dollars flow through markets among households & firms
2
Q
Factors of Production
A
The resources the economy uses to produce goods &a services, including:
- labor
- land
- capital (buildings & machines used in productions)
3
Q
Productions possibilities frontier
A
A graph that shows the combinations of two goods the economy can possibly produce given the available resources & available technology.
4
Q
Opportunity Cost
A
What must be given up to obtain an item
