Chapter 2 Reading pt.2 Flashcards

1
Q

What is a “Production Possibilities Frontier (PPF)

A

It shows the combinations of two goods that are possible for a society to produce at full employment.

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2
Q

What is an Opportunity Cost

A

What you or the economy must give up to have more of a product or service

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3
Q

2,000 backpacks must be given up to obtain 3200 tablets, what is the opportunity cost of 1 tablet? How do you calculate it.

A

2,000/3,200 = 0.625

The opportunity cost of 1 tablet is 0.625 backpacks

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4
Q

Economic growth can be viewed as an _____ shift on the PPF

A

Outward

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5
Q

Economic growth has two basic determinants, what are they?

A

Expanding resources and improving technologies

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6
Q

What is an “investment in human capital”

A

improving workers skills to increase the labour factor on PPF

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7
Q

Why would a PPF shift outward?

A

As a result of an increase in resources

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8
Q

The goods we buy from other countries are called _____, while the goods we sell to other countries are called _______.

A

Imports ; Exports

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9
Q

When does an “Absolute advantage” occur

A

When one country can produce more of a good that another country using the same amount of resources

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10
Q

When does a country have a “comparative advantage” in producing a good

A

A country has a comparative advantage in producing a good if its opportunity cost is lower than another countries opportunity cost for that good

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11
Q

What does it mean when a country is in “Autarky”

A

It means they do not trade with other countries, they have a closed economy

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