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Midterm

Econ 101 Midterm Review .docx

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Department
Economics
Course
ECON101
Professor
Andrew Wong
Semester
Fall

Description
1. As long as resources are scarce, a PPF will slope downward because? Producing more of one good always means producing less of another 2. Equation for Opportunity Cost Quantity given up Quantity gained 3. The opportunity cost is the same as the absolute value of the slope of the PPF. 4. Along a linear PPF with a constant slope, the opportunity cost is constant and is measured by the slope of the PPF. 5. When the opportunity cost is increasing, the PPF has a distinctive concave or bowed out shape. 6. With an increase in available productive resources or advance in technology, the production set ______. Increases 7. One person cannot have a comparitive advantage in the __________ Production of both goods 8. Using comparative advantage, each country should produce and export good for which its domestic opportunity costs are ____ than the domestic opportunity costs of other nations Lower 9. Countries should buy and import from other nations those goods for which its domestic opportunity costs are ______ than domestic opportunity costs of other nations Higher 10. A graph showing the maximum attainable combinations of 2 goods that an economy can produce using its available productive resources (labor, capital and natural resources) and its available technology. Production possibilities frontier (PPF) 11. Producing in a way that best uses all of the economy's resources Productively efficient 12. The cost of a good expressed as the best alternative that must be given up in order to have that good Opportunity Cost 13. The ability to produce more goods n an economy, represented by an outward shift of the PPF Economic growth 14. The set of all attainable combinations of goods, both on and inside the PPF Production set 15. The ability of an individual, company or country to produce more of a good or a service using the same amount of productive resources Absolute advantage 16. The ability of an individual, company or country to produce a good or service at a lower opportunity cost than its competitors Comparative advantage 17. Goods and services purchased from a foreign country Imports
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