PPF

Question 1

PPF Graph

Answer 1

Is usually downward sloping indicating increasing opportunity cost

Question 2

Trade off

Answer 2

Giving up one thing to gain something else

Question 3

Opportunity Cost

Answer 3

The value of the next best alternative that is forgone when making a choice

Question 4

Production Efficiency

Answer 4

How well a company uses its resources(time,materials,labor) to produce the best quality goods and services.

Question 5

Absolute Advantage

Answer 5

-Being able to produce a good more efficiently than another entity
-Entity A can produce 10 tons of wheat or 5 tons of cloth with the same resources, while entity B can produce 4 tons of wheat or 2 tons of cloth with the same resources. Entity A has the absolute advantage

Question 6

Comparative Advantage

Answer 6

When an entity can produce a good, at a lower opportunity cost than the other country. Entities can benefit from trading by specializing in the goods where it has a comparative advantage.