Scarcity
definition of scarcity
gap between limited resources and limitless wants
definition of opportunity cost
value of the next best alternative that you must give up or sacrifice.
This term describes the ability of a country to produce more of a good than another country using the same amount of resources.
absolute advantage
According to the Law of Demand, as the price of a good increases, this happens to the quantity demanded.
decreases
where would you find equilibrium on a market graph?
where supply and demand intersect
unlike scarcity, which is a permanent condition of the world, this is a temporary market condition where the quantity demanded exceeds the quantity supplied at a specific price.
shortage
If a farmer can produce either 100 bushels of corn or 50 bushels of wheat, this is the opportunity cost of producing one bushel of wheat
2 bushels of corn
A country has this if they can produce a specific good at a lower opportunity cost than their trading partner.
comparative advantage
This is the only variable that causes a movement along a curve (change in quantity) rather than a shift of the entire curve.
change in PRICE
If the current market price is above the equilibrium price, the quantity supplied will be greater than the quantity demanded, resulting in this condition.
surplus
These are the four categories of resources used to produce all goods and services.
land, labor, capital, entrepreneurship
On a PPC graph, any point located inside the curve represents this inefficient economic condition.
underutilization/under-employment of resources
Country A can produce 20 Planes or 40 Cars. Country B can produce 30 Planes or 30 Cars. Which country has the Absolute Advantage in Planes?
B
If the price of peanut butter increases, the demand curve for its complement, jelly, will shift in this direction.
left
If the Quantity Demanded is 100 units and the Quantity Supplied is 40 units, the market is in disequilibrium and experiencing a shortage of this many units.
60 unit shortage
In the four "Factors of Production," a tractor, a factory building, and a delivery truck are all examples of this specific type of resource.
capital
if an economy gets more resources or improves technology, what direction does the entire PPC shift?
outward
Country A can produce 20 Planes or 40 Cars. Country B can produce 30 Planes or 30 Cars. Which country has a comparative advantage in planes?
B
An increase in the cost of resources (like wages or raw materials) will cause the supply curve to shift in this direction.
left
This is a government-mandated legal maximum price set below the equilibrium level, which typically results in a shortage.
price ceiling
three basic economic questions every society must answer because of scarcity. hint: 1) what to produce...
2) how to produce 3) who gets it
If a PPC is a straight line instead of a "bowed-out" curve, it indicates that the resources used to make the 2 products are...
easily adaptable to making both products, with constant opportunity cost
Country A can produce 20 Planes or 40 Cars. Country B can produce 30 Planes or 30 Cars. Name a mutually beneficial term of trade for 1 car.
anything between 1/2 and 1 plane
A popular new health study causes the Demand for kale to increase, while a massive drought causes the Supply of kale to decrease. What happens to the equilibrium price and quantity?
Price increases but quantity is indeterminate
what happens if the government sets a price floor below the equilibrium price?
nothing, not binding