Resources
In terms of resources Mr. Wilson would be categorized as?
Labor
The second best choice you gave up when you chose the first best choice.
What is Opportunity Cost
When one country is better at making a product than another.
What is Absolute Advantage.
PPF. X: Lumber, Y: Apples; The number of lumberjacks in the country rises by 20%.
Shift outward on X-Axis ONLY.
All the alternatives that we give up whenever we choose one course of action over others?
Trade-offs
In terms of resources a truck would be categorized as?
Capital
When an economy operates inside the PPC/PPF.
What is Inefficiency or Underemployment.
The ability of an economy to produce a good at a lower opportunity cost than another country.
What is Comparative Advantage.
PPF. X: Lumber, Y: Apples; The quality of earth's soil around the country declines.
Frontier shifts INWARD on BOTH axes.
Based on facts. Avoids value judgments (what is or what will be)?
Positive Economics
In terms of resources Phil Knight (Creator of Nike) would be categorized as?
Entrepreneur
Any point outside the PPC/PPF
What is Unattainable.
United States: 500 bushels of corn Mexico: 400 bushels of corn. Absolute Advantage?
What is the United States?
PPF. X: Lumber, Y: Apples; Machines used to produce both lumber and apples go unused.
No shift. Point inside the frontier. UNDERUTILIZATION.
This result is because our wants are greater than our limited resources?
Scarcity
In terms of resources a factory building would be categorized as?
Capital
This means that the more you have of something, the less utility [satisfaction] you get from each new unit.
What is Diminishing Marginal Utility
United States: 100 cars 200 tomatoes France: 90 cars 100 tomatoes/ Comparative Advantage for Cars?
What is France?
PPF. X: Lumber, Y: Apples; Elon Musk invents a new apple picking robot.
Shift outward for apples ONLY.
Includes value judgment?
(what should or ought to be, essentially an opinion)?
Normative Economics
In terms of resources, minerals on the Moon would be categorized as?
Land
As production of a product increases, the cost to produce an additional unit of that product increases as well.
What is The Law of Increasing Opportunity Costs
If country A has an absolute advantage over country B which country benefits from trade?
Both
PPF. X: Lumber, Y: Apples; Trump buys Greenland.
Shift outward on BOTH X and Y.
Economics studies the choices of?
Individuals
Firms
Governments