Economic Fundamentals
This is the study of how people choose to use their limited resources to satisfy their unlimited wants.
Economics
This factor includes all "gifts of nature" or natural resources not created by human effort.
Land
This term describes the next best alternative given up when making a choice.
Opportunity Cost
A point located directly on the PPC line represents this state of resource use.
Efficiency (Full Employment of resources)
This happens to the entire PPC when there is a general increase in a nation's resources or technology.
Outward Shift (Shift to the right)
This fundamental problem arises because we have unlimited wants but limited resources.
Scarcity
This factor refers to the people with all their efforts, skills, and abilities.
Labor
This principle states that most decisions involve doing a little more or a little less of something rather than an "all or nothing" choice.
Thinking at the Margin
A point located inside (to the left of) the PPC curve represents this.
Inefficiency or Unemployment
This event, such as a major oil spill or a natural disaster, would cause the PPC to do this.
Shift Inward (Shift to the left)
These are the three basic questions every economy must answer regarding the allocation of resources.
What to produce, how to produce, and who to produce for?
These are the tools, equipment, and factories used in the production of goods and services.
Capital
These are the "all-or-nothing" alternatives we sacrifice when we make a decision.
Trade-offs
A point located outside (to the right of) the PPC is currently considered this.
Unattainable (Impossible given current resources)
True or False: A change in the demand for a product will shift the PPC.
False (A change in demand does not shift the curve)
This famous economist believed that an "invisible hand" and self-interest would lead to a healthy economy.
This individual is a risk-taker who starts a new business or brings a product to market.
Entrepreneur
If a student spends 3 hours studying instead of going to the movies, the enjoyment of the movie is considered this.
Opportunity Cost
This is the common shape of a PPC when resources are not easily adaptable, meaning the opportunity cost increases as you produce more.
What is a "Bowed Out" or Concave curve
These are the three primary "shifters" of the PPC
Changes in Resource Quantity/Quality, Changes in Technology, and Changes in Trade
These two types of "capital" distinguish between the tools/factories used in production and the knowledge/skills workers possess.
Physical Capital and Human Capital
This is the acronym used to remember the four factors of production.
CELL
This economic principle suggests that people respond to "carrots" or "sticks" that encourage them to act in certain ways.
"Incentives Matter"
These are the four key assumptions made when creating a PPC graph.
1. Only two goods produced, 2. Full employment of resources, 3. Fixed resources, and 4. Fixed technology.
If a country experiences a significant increase in education and job training, the curve shifts outward because this factor has improved.
Quality of Labor (Human Capital)