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Production Possibilities Frontier (PPF)
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a curve showing the maximum attainable combinations of 2 products that may be produced with available resources and current technology
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Economic Growth
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the ability of economy to increase the production of goods and services
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Trade
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act of buying and selling, to benefit both trade partners
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Market Place
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brings buyers and sellers together
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Product Markets
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market for goods; households demanders and firms are suppliers
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Factor Markets
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markets for the factors of production
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Factors of Production
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inputs used to make goods/services
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4 Categories of Factors of Production
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labor, capital, land, and technology
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Absolute Advantage
answer
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
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Comparative Advantage
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the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors
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Circular Flow Diagram
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a model that illustrates how participants in markets are linked
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Economic Models
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simplified version of reality
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Free Market
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a market with few government restrictions on how a good/service can be produced or sold or on how a factor of production can be employed
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Adam Smith
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father/founder of modern economics
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Property Rights
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the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it
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Normative
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value judgement, what we should do or ought to be
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Gross Domestic Product (GDP)
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-economic indicator that looks at the state of the entire economy
-market value of all goods/services
-equal to consumption spending + investment spending + government spending + exports - imports
-market value of all goods/services
-equal to consumption spending + investment spending + government spending + exports - imports
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