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8 Cards in this Set
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- Back
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Every economy must solve three main coordination problems:
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1- What, and How much to produce?
2- How to produce it? 3- for whom to produce it? |
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Production possibility table
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a table that lists a choice's opportunity costs by summarizing what alternative outputs you can achieve with your inputs (resorces)
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Production possibility curve (PPC) is ..
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A curve measuring the maximum combination of outputs that can be obtained from a given number of inputs
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The Production possibility curve demonstrates that :-
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1- There is a limit to what you can achieve.
2- Every choice you make has an opportunity. |
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The principle of increasing marginal opportunity cost is :-
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In order to get more of something, one must give up ever-increasing quantities of something else.
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Why are the production possibility curves typically bowed outward?
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Because some resources are better suited for the production of certain kind of goods than other kinds of goods.
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Comparative advantage:-
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the ability to be better suited to the production of one good than to the production of another good
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Productive efficiency
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Achieving as much output as possible from a given amount of inputs or resources
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