AP Review - PPC and Trade Flashcards
(8 cards)
1
Q
What are the three shifters of the PPC?
A
- Change in resource quality or quantity
- Change in technology
- Change in trade (doesn’t move graph, but offers more alternative products/options)
2
Q
How to represent unemployment on a PPC?
A
Literally just a point within the curve
3
Q
Gains from trade
A
More choices and a higher standard of living
4
Q
Formula for per unit opportunity cost
A
(opportunity cost) / (units gained)
5
Q
Absolute advantage of production
A
Producer that can produce MOST OUTPUT of a product
6
Q
Comparative advantage of production
A
Producer with lower opportunity cost
7
Q
How can both countries benefit from trade?
A
If both countries have relatively low opportunity costs
8
Q
Terms of trade
A
Agree upon conditions of trade that will benefit both countries
