Quiz 1 Flashcards
Economic growth is the result of what two things ?
Better resources
Advanced technology
Where a country produces today determines…..
Where they can produce tomorrow
What is the most important concept of the PPC
Opportunity cost
Four assumptions of the PPC curve
Full employment
Fixed technology
Two products
Fixed resources
What does it mean when we are inefficient
Under or unemployment
What does a straight line indicate
Both products are equally substitutible
Not specialized in particular uses and Oc remains the same
Economic growth
Ability to produce a larger output over time
What does resources are fixed mean
No way to increase availability of land, labor, capital, entrepreneurship , resources can be reallocated
All resources are fully employed
Running at full production and producing goods and services at the least cost , nothing unused
Technology is fixed means
No new breakthroughs ppc is only one time period
Only two things being produced means
Freezing the economy in time to focus on economy’s productive alternatives based on technology today
Five ppc concepts
Scarcity: rep. By frontier line
Choices: rep. By dots , means opportunity cost
Oc: illustrated by moving from one point to another when resources being utilized to full potential
Efficiency: max. Output w/ available resources, can’t increase production of one good without decreasing that of another
Economic growth: more resources, better tech.
Limited resources means…
Limited output, at some point when economy acting at full employment full potential, must sacrifice x or y to gain more of one or the other
Circular flow
Abstract model showing how economic transactions take place
What does ppc stand for
Production possibilities curve
