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The Economic Problem: Scarcity and Choice
N/A
12
Economics
Undergraduate 1
09/13/2011

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Cards

Term
Capital
Definition
Things that are produced then used in the production of other goods and services
Term
Factors
Definition
The basic resources available to a society
Term
Three key factors of production
Definition
Land, Labor, and Capital
Term
Production
Definition
The process that transforms scarce resources into useful goods and services.
Term
Theory of Comparative Advantage
Definition
specialization and free trade will benefit all trading parties, even when some are "absolutely" more efficient producers than others
Term
Absolute Advantage
Definition
A producer has an absolute advantage over another in the production of a good or service if he or she can produce the good or service using fewer resources, including time.
Term
Comparative Advantage
Definition
A producer has comparative advantage over another in the production of a good or service if he or she can produce the good or service at a lower opportunity cost.
Term
Consumer Goods
Definition
Goods for present consumption
Term
Investment
Definition
The process of using resources to produce new capital
Term
Production Possibility Frontier (PPF)
Definition
illustrates the principles of constrained choice, opportunity cost, and scarcity
Term
Output efficiency
Definition
In addition to operating on the PPF, the economy must be operating at the right point on the PPF
Term
Marginal Rate of Transformation (MRT)
Definition
The slope of the production possibility frontier
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