study of how societies use scarce productive resources to satisfy unlimited material wants
What is economics
100
if the economy is producing at a point within the PPF curve, the economy is...?
inefficient
100
name the four factors of production
labor, capital, land, entrepreneurship
100
what market system encourages the ownership of private property?
capitalism
100
when the economy produces optimal mix of goods and services
What is allocative efficiency
200
being faced with choices that involve benefits and costs
What is trade-off
200
how does an economy produce outside of the curve?
economic growth
200
when do we act upon marginal analysis?
When marginal benefit equals or outweighs the marginal cost
200
what are the four factors encouraged by a capitalist system?
innovation, growth, trade, investment
200
economic growth occurs from improvements in these three categories:
resource quantity, resource quality, increase in technology
300
the more good produced, the greater the opportunity cost of producing the next unit of good
What is law of increasing costs
300
what is the slope of the PPF graph?
opportunity cost of x-axis
300
if John can make 5 sandwiches in the amount of time he can make 2 servings of pasta, what is the opportunity cost of producing pasta?
5/2 or 2.5
300
what type of motivation is fundamental to the workings of a capitalist system?
self-interest; maximize profits
300
society has a _______ desire for resources/materials
What is limited
400
max output for given level of technology and resources
What is productive efficiency
400
how do you find the opportunity cost of the y-axis?
inverse of graph's slope
400
if country A can make 5 tires for every bail of hay, and country B can make 3 tires for every bail of hay, who has the comparative advantage in producing hay?
country B
400
why are prices important in the market system?
they send signals to consumers and decisions are based off prices
400
in economics, what is a synonym for marginal?
additional
500
focusing of resources to produce good/service in which there is a comparative advantage
What is specialization
500
realistically, why isn't a PPF graph linear?
law of increasing costs
500
if country A can make 5 tires for every bail of hay, and country B can make 3 tires for every bail of hay, who has the absolute advantage?
country A
500
what role does freedom play in a capitalist system?
people are free to chose what they will sell to others so they can buy what they want