Economic Geography Flashcards
How does increasing marginal costs work?
As one industry expands at the expense of others, increasing amounts of the other products must be given up to get each extra unit of the expanding industry’s product
Production Possibility Curve (PPC)
Shows the combinations of amounts of different products that a country can produce, given the country’s available factor resources and maximum feasible productivities
What are the 2 ways to picture increasing marginal costs?
The two product bowed out ppc
The upward supply curve that focuses on one of these products
What is behind the bowed out production possibility curve?
A PPC is derived from information on both total factor (resource) supplies and the production functions that indicate how factor inputs can be used to produce outputs in various industries
Indifference curve
Shows the various combinations of consumption quantities that lead to the same level of well being or happiness
What is the Heckscher-Ohlin (H-O) theory?
Predicts that a country exports the product that uses its relatively abundant factor intensively and imports the product that uses its relatively scarce factor intensively
When is a country relatively labour abundant?
If it has a higher ratio of labour to other factors than does the rest of the world
When is a country relatively labour intensive?
If labour costs are a greater share of its vale than they are of the value of other products
