There will always be more definitions.
The value of the best opportunity not chosen
What is opportunity cost?
Getting the maximum possible output from available resources
What is efficiency?
What is an economic system?
What is measured along the axis of the production possibilities frontier diagram
What is the quantity of goods produced?
Sam can chop more carrots per minute than Joe. Sam has this type of advantage in carrot chopping.
What is absolute advantage?
A law that says that a person should produce a good if he/she has the lowest opportunity cost of producing the good
What is the law of comparative advantage?
The direct exchange of goods without the use of money
What is barter?
The competitive market forces that determine prices, according to Adam Smith
What is the "invisible hand"?
Represents what cannot be reached using available technology
What is a point outside the production possibilities frontier?
If Daniel produces one pair of shoes in 4 hours and Sarah produces one pair of shoes in 3 hours, then Sarah has this type of advantage over Daniel in shoemaking.
What is a comparative advantage?
Costs that should not be considered when making economic decisions
What are sunk costs?
Focusing efforts on a particular product or a single task
What is specialization?
Reflects the fact that resources are not perfectly substitutable
What is the law of increasing opportunity cost?
Represents inefficiency or unemployment
What is a point inside the production possibilities frontier?
If Jason can wash a car in 20 minutes and wash a dog in 10 minutes and Megan can wash a car in 15 minutes and wash a dog in 15 minutes, this person has the comparative and absolute advantage in dog-washing.
Who is Jason?
When an individual/country/organization can produce a greater quantity of a good, product, or service than competitors while using the same amount of resources
What is absolute advantage?
Separating a job into smaller tasks to be completed by different people
What is the division of labor?
An economy where decision making is centralized
What is a command/socialist economy?
On the PPF, the opportunity cost of producing one more unit of a commodity per pay period is measured by this
What is the level of satisfaction a product gives customers?
Don can produce 10 pens or 20 pencils in one hour, while Bob can produce 5 pencils or 15 pens in one hour. Bob has this type of advantage(s) over Don in pen production.
What is an absolute advantage?
Shows the greatest achievable output levels of production within an economy and illustrates scarcity, opportunity cost, and economic growth
What is the production possibilities frontier?
Facilitates trade as a medium of exchange
What is money?
An economy where decision-making is decentralized
What is a capitalist economy?
An indication that resources are equally adapted to the production of either product
What is a straight line production possibilities frontier?
You have a choice of working full-time during the summer or going to summer school full-time. Summer tuition and books cost $2,200. If you worked, you could earn $7,000. Your rent for the summer is $1,000 either way. If these are the only relevant costs to consider, then this amount will be the total opportunity cost.
What is $9,200?