Production Possibilities
This is the reason why a PPF is curved.
What is resources are specialized.
What is the term for the ability to produce a good using fewer inputs than another producer?
What is absolute advantage?
Assuming ceteris paribus, this "law" states that as the price of a good increases, the quantity demanded for that good decreases.
What is the law of demand.
A decrease in the number of producers in a market would have this effect on the market supply curve.
What is a shift to the left?
This would be ilustrated by a point within a PPF moving instead of the PPF shifting.
What is a change in the unemployment rate.
Developed by economist David Ricardo, this concept explains why countries with an absolute advantage in all goods can still benefit from trade.
What is comparative advantage?
When consumer income increases, the demand curve for this type of good shifts to the left, since people buy less of it.
What is an inferior good.
A decrease in the price of a good will not cause a change in the supply of a good, but . . .
What is the quantity supplied.
This is the opportunity cost of higher consumption in the future.
What is less consumption today.
When determining which country has a comparative advantage, this is the cost that must be measured, representing what's given up to produce another good.
What is opportunity cost.
This term describes two products, where an increase in the price of one leads to an increase in demand for the other, shifting its demand curve to the right.
What are substitute goods.
Producers' expectations that the price of their product will fall in the near future will cause the current supply curve to shift in this direction.
What is a shift to the right (or an increase in supply)?