Hubbard O’Brien Microeconomics Chapter 2 Vocab

a curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology (Points on the curve are efficient, inside the curve are inefficient, outside the curve are unattainable, economic growth is indicated by an outward shift in the ppf)

The highest-valued alternative that must be given up to engage in an activity.

the ability of the economy to increase the production of goods and services

the act of buying and selling

the ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources

the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors (You can have a comparative advantage without having an absolute advantage)

a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade

a market for goods - such as computers - or services - such as medical treatment

a market for the factors of production, such as labor, capital, natural resources, and entrepreneurial ability

labor, capital, natural resources, and other inputs used to make goods and services

a model that illustrates how participants in markets are linked

a market with few government restrictions on how a good or service can be produced or sold or on how a factor of production can be employed (Adam Smith argued in his 1776 book The Wealth of Nations that in a free market, in which the government does not control the production of goods and services, changes in prices lead firms to produce the goods and services most desired by consumers. If consumers demand more of a good, its price will rise. Firms respond to rising prices by increasing production. If consumers demand less of a good, its price will fall. Firms respond to falling prices by producing less of a good.)

someone who operates a business, bringing together the factors of production - labor, capital, and natural resources - to produce goods and services

the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it

A situation in which unlimited wants exceed the limited resources available to fulfill those wants