Opportunity cost and PPC
What are the 4 factors of production?
If demand increases (shifts right) and supply stays the same, what happens to equilibrium price?
It increases
A country decides to use its limited steel supply to build high-speed rail instead of new cars. The value of the cars not produced is called...?
Opportunity cost
The term for what you give up when you make one choice instead of another—especially when producing on the PPC.
Opportunity cost
This law says when price rises, quantity demanded falls—what is it called?
Law of demand
In 2023, China could produce 1,000 solar panels per worker per day, while Vietnam could only produce 200 solar panels per worker per day. China's ability to produce more output with the same number of workers demonstrates...?
absolute advantage
On a PPC, this occurs when producing more of one good requires giving up some of another.
Trade Off
A shift in demand is caused by non-price factors like income, tastes, or prices of substitutes/complements—what category is this?
Demand shifters
Brazil produces coffee more efficiently than Germany, while Germany produces machinery more efficiently than Brazil. Both countries benefit when they specialize and trade based on this principle. What is this called?
comparative advantage
A PPC curve that bows outward suggests increasing what?
opportunity cost (increasing marginal opportunity cost)
If there is a shortage, it means the market price is below equilibrium—what direction will price move until equilibrium is reached?
Price rises
During the COVID-19 pandemic, a factory stopped making luxury handbags and started making face masks instead. On a graph showing possible production combinations, what kind of movement occurs?
movement along the curve
If the PPC shifts outward, what does that MOST likely mean about the economy—technology, resources, or productivity?
an increase in productive capacity
Elasticity: If demand is price elastic, a price increase causes what to total revenue?
Total revenue decreases
Elon Musk reassigns engineers from working on a new rocket at SpaceX to improving battery production at Tesla. The more rocket progress he gives up for each unit of battery improvement, the harder it gets. This real-world pattern explains...?
the increasing of opportunity cost