Chap2&19&3macroF10

Chap2&19&3macroF10 - A Basic Question How...

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A Basic Question How do you allocate scarce resources among competing needs and wants?
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Chapter Two Definitions h Land - All natural resources, such as minerals, forests, water and unimproved land. a Labor - The physical and mental talents people contribute to the production process. a Capital - Produced goods that can be used as inputs for further production, such as factories, machinery, tools, computers and buildings. a Entrepreneurship - The particular talent that some people have for organizing the resources of land, labor and capital to produce goods, seek new business opportunities, and develop new ways of doing things.
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More Definitions Production - The conversion of labor, land, capital, and entrepreneurial ability into goods and services. a Production Possibilities Curve - is a curve measuring the maximum combinations of outputs that can be obtained from a given number of inputs.
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Chapter Two Definitions, Cont . h Production efficiency - achieving as much output as possible from a given amount of inputs or resources. a Inefficiency - getting less output from inputs which, if devoted to some other activity, would produce more output. a Principle of increasing marginal opportunity cost - in order to get more of something, one must give up ever- increasing quantities of something else.
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Chapter 19 material and Ricardo Review Importance of Trade (Table, p. 445) Review Figures 19-1 David Ricardo (1772-1823) and the Principle http://homepage.newschool.edu/het//profiles/ric
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Interdependence and the Gains from Trade Absolute advantage - the comparison among producers of a good according to their productivity. Comparative advantage - the comparison among producers of a good according to their opportunity cost.
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produce the cloth may require the labour of 100 men for one year; and if she attempted to make the wine, it might require the labour of 120 men for the same time. England would therefore find it her interest to import wine, and to purchase it by the exportation of cloth. To produce wine in Portugal, might require only the labour of 80 men for one year, and to produce the cloth in the same country, might require the labour of 90 men for the same time. It would therefore be advantageous for her to
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Chap2&19&3macroF10 - A Basic Question How...

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