Econ Ch.2 study help - Chapter 2 Capital Things that are...

Info icon This preview shows pages 1–2. Sign up to view the full content.

Chapter 2: Capital: Things that are themselves produced and that are then used in the production of other goods and services. (Buildings, equipment, highways, etc…part of nations stock of capital) Theory of Comparative Advantage: Ricardo’s theory that specialization and free trade will benefit all trading parties, even those that may be absolutely more efficient producers. Absolute Advantage: A producer has an absolute advantage over another in the production of a good or service if it can produce that product using fewer resources. Comparative Advantage: A producer has a comparative advantage over another in the production of a good or service if it can produce that product at a lower opportunity cost. Ex: Bill and Colleen (pg. 29) Production Possibility Frontier: Graph that shows the combinations of goods or services that can be produced if all of societies resources are used efficiently. Example: Shape of PPF* Negatively sloped (As more x is produced, less y is produced)* Diminishing Returns*
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Economic Growth: Increasing technology, ppl, land, etc (total output and new resources) Technological progress in both X and Y: Only on X: Only on Y: Slope of PPF and O.C: Examples: Marginal Rate of Transformation (MRT): The value of the slope of a society’s PPF Command Economy: An economy in which a central government either directly or indirectly sets output targets, incomes, and prices. Laissez-faire economy: Economy in which individual ppl and firms pursue their own self-interests w/o any central direction or regulation. Market: The institution through which buyers and sellers interact and engage in exchange. Consumer Sovereignty: The idea that consumers ultimately dictate what will be produced (or not) by choosing what to purchase (and what not to purchase). Free Enterprise: The freedom of individuals to start and operate private businesses in search of profits....
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern