The Rubberband Effect
This measures how responsive quantity demanded or supplied is to a change in price.
What is price elasticity?
This occurs when individuals or countries focus on producing fewer goods.
What is specialization?
This measures how quantity demanded of one good responds to a price change of another good.
What is cross-price elasticity of demand?
This curve represents the maximum output combinations of two goods.
What is the PPC?
This system answers the questions of what, how, and for whom to produce.
What is an economic system?
Theses goods have a negative XED.
What is a compliment good?
Comparative advantage is based on this.
What is lower opportunity cost?
A positive cross-price elasticity indicates these two types of goods.
What are substitutes?
A point inside the PPC represents this condition.
What is inefficiency?
In a market economy, this determines prices.
What is supply and demand?
If elasticity is greater than 1, demand is classified as this.
What is elastic?
Country A gives up fewer units of wheat to produce corn, it has this advantage.
What is comparative advantage in corn?
A negative cross-price elasticity indicates this relationship.
What are complements?
Moving from one point to another on the PPC illustrates this economic concept.
What is opportunity cost?
This type of economy combines elements of market and command systems.
What is a mixed economy?
This formula is used to calculate price elasticity of demand.
What is percentage change in quantity divided by percentage change in price?
When countries specialize and trade, total output typically does this.
What is increases?
If cross-price elasticity is close to zero, the goods are this.
What are unrelated goods?
An outward shift of the PPC represents this.
What is economic growth?
In this type of economic system, the government owns most resources and makes decisions about what to produce, how to produce it, and for whom it is produced.
What is a command economy?
Necessities tend to have demand that is this type.
What is inelastic?
Even if one country has an absolute advantage in all goods, trade can still benefit both countries because of this concept.
What is comparative advantage?
A rise in the price of coffee increases demand for tea; this elasticity would be this sign.
What is positive?
If an economy is producing inefficiently, this must be true about its resources.
What is that resources are underutilized or unemployed?
Barriers such as tariffs reduce this economic benefit.
What is trade?