Graph basics Flashcards
Autarky
Economy that does not trade with other countries.
Self-sufficient country, closed economy
Consumer surplus
Geld wat consumenten overhouden omdat de prijs van een product lager is dan wat ze bereid zijn te betalen
Producer surplus
Extra opbrengst voor de producent bovenop zelf gestelde minimum prijs
Where is producer surplus?
always below priceline
Where is consumer surplus?
always above priceline
What causes a movement along the curve in quantity supplied?
change in price
What causes a movement of the curve in quantity supplied?
change in something besides price: numbers of sellers, technology
When does trade arise?
Difference in supply, not demand
What causes a movement of the curve in quantity demanded?
change in income, preference, price of related good
What causes a movement along the curve in quantity demanded?
change in price
Production Possibility Frontier (PPF)
the possible combinations of output of two products given its available resources and technology
opportunity cost
is what must be forgone when a decision is made
comparitive advantage
an economy’s ability to produce a good at a lower opportunity cost than trading partners
The Ricardian model
Measures goods in terms of opportunity cost.
Assumes technology is the main factor differentiating the two
Hecksher Ohlin model
countries export what they can most easily and abundantly produce.
Difference in comparitive advantage between two countries might be due to the abundance of factor resources
