Unit 3 Flashcards
What does PPF stand for?
Production possibility frontier
What is a PPF?
A mathematical relationship (graph or equation) that shows the maximum amount of goods or services that can be produced with given resources and technology
What are PPFs represented by?
Simple straight lines
What does the slope of a PPF give us?
The opportunity cost of producing one good in terms of another
What is production efficiency?
Means making goods and services with the least waste and cost while maintaining quality
What is economic growth?
Economic growth is the expansion of an economy over time, resulting in improved living standards and prosperity
What is marginal benefit and cost in relation to a PPF?
Marginal benefit and cost on a PPF tell us the extra good or bad of making one more thing, considering the trade-offs
What are gains from trade?
Countries that trade because each is better at producing certain things. By specializing in what they are good at, they can produce more overall
What is a comparative advantage?
Comparative advantage means being better at making something compared to others, allowing for specialization and trade
What is an absolute advantage?
Absolute advantage means being able to produce more of something with the same resources as others. This indicates higher productivity or efficiency in production
