Unit 1 Flashcards
What does Economics focus on?
Scarcity
What does the production possibilities curve show?
Different combinations of two goods that can be produced
Countries that have a ______ advantage can specialize in the production of specific goods and trade with other countries at a lower _____ cost than if they produce everything on their own.
comparative, opportunity
Scarcity is the idea that individuals and society have unlimited____ but limited _____
wants/desires, resources
Four factors of production
Land, labour, capital, and entrepreneurship
Difference between physical and human capital?
Physical capital deals with the production of goods (Tools, Machines)
Human capital deals with the specific skills and requires workers need to produce things.
Where on the PPC curve will have the most economic growth?
The point that is closest to capital goods, because with more resources allocated to capital goods, production will increase as well as economic growth.
What does a point inside the PPC graph mean?
Unemployment/ Underutilization
What does a point outside the PPC graph mean?
Unattainable
Products with ____ opportunity cost have similar resources and result in a PPC that is a straight line
Constant
Products with ____ opportunity cost have different resources and result in a PPC that is bowed out
Increasing
What are the two types of Comparative advantage questions?
Input, Output
How do you calculate comparative advantage?
You calculate comparative advantage by dividing those cost/gain of a decision. Which ever has the lower opportunity cost has the comparative advantage.
What are explicit costs?
Out of pocket (cash costs) from making a decision.
What are implicit costs?
Opportunity cots from making a decision.
