Chapter 3 Flashcards
What is labor?
Human physical and mental effort used in the production of goods and service.
What is capital?
A good produced to be used for other goods and service.
What is land?
Natural resources / anything not man made
What is financial capital?
Money and other paper assets used in the production of gets.
What is technology?
machinery and equipment developed from the application of scientific knowledge.
something that helps the production process
What is an Entrepreneurship?
The ability to put together all the other factors of production?
What is the production possibility model?
A graph representing production tradeoffs of an economy given fixed resources and technology
What is production possibility curve?
This is a graphical representation of the PPA. It shows graphically the maximum combination of any two goods that a country or firm can produce using all the available resources and technology.
How do you find the opportunity cost?
giving up / trying to get = oppertunity
What is the opportunity cost of production?
This refers to giving up one good to produce another good
What is comparative advantage?
This refers to the ability of a firm or a country to produce at the lower opportunity cost compared to competitors
What is absolute advantage?
The ability to produce more of a good or service with the same amount of resources as competitors (deciding which company should produce what)
What is the law of increasing opportunity?
As more and more of a good is produced the opportunity cost of producing that good increases.
What does movement along the PPC mean?
This refers to the concept of trade increase in the production of one god leading to decrease in the production of another good because resources are limited or scares
What is full employment?
A situation where all the resources available from production are for/ used in the production process
