1.1/1.2
This basic economic problem arises because resources are limited while wants are unlimited
What is Scarcity?
This economic principle suggests that countries should produce goods they can create most efficiently
What is Comparative Advantage?
The graphical representation of the relationship between the price of a good and the quantity demanded
What is a demand curve?
The point where the quantity supplied equals the quantity demanded
What is Market Equilibrium?
These are always in short supply and cannot meet all our wants
What are limited resources?
If Country A can produce wine more efficiently than Country B, it has this in wine production
What is a Comparative Advantage?
The law stating that, all else equal, an increase in the price of a good will decrease the quantity demanded
At market equilibrium, this term describes the price at which the quantity supplied equals the quantity demanded
What is the Equilibrium Price?
When a business decides to produce more of product A, the reduced ability to produce product B represents this concept
what is opportunity cost?
omparative advantage leads to this, where countries focus on producing specific goods
What is Specialization?
The graphical representation of the relationship between the price of a good and the quantity supplied
What is a Supply Curve?
If the market price is above the equilibrium price, this occurs
What is a Surplus?
If you choose to spend your evening studying for an exam instead of going to a movie with friends, the enjoyment you miss out on at the movie is an example of this concept.
What is opportunity cost?
The principle of comparative advantage explains why this type of economic exchange is beneficial
What is Trade?
This occurs when the quantity demanded of a good exceeds the quantity supplied at the current price
What is a Shortage?
This occurs when market price is below the equilibrium price
What is a Shortage?
This economic principle explains why individuals and societies must make choices, as every decision involves giving up something else
What is the principle of trade-offs?
This economist is credited with introducing the concept of comparative advantage
Who is David Ricardo?
This factor can cause both the demand curve and the supply curve to shift
What is a Change in Market Conditions (or External Factors)?
his term refers to a situation where there is neither a surplus nor a shortage in the market
What is Market Clearing?