| Term | Definition |
|---|
| productive possibilities frontier | a curve showing the maximum attainable combinations of two products that may be produced with available resources and current technology |
| economic growth | the ability of the economy to produce increasing quantities of goods and services |
| absolute advantage | the ability of an individual, a firm, or a country to produce more of a good or service than competitors, using the same amount of resources |
| comparative advantage | the ability of an individual, a firm, or a country to produce a good or service at a lower opportunity cost than competitors |
| What is the basis for trade? | comparative advantage |
| product markets | markets, for goods - such as computers - and services - such as medical treatment |
| factor markets | markets for the factors of production, such as labor, capital, natural resources, and entrepreneurial ability |
| factors of production | the inputs used to make goods and services |
| labor | includes all types of work |
| capital | refers to physical capital, such as computers and machine tools, used to make other goods |
| natural resources | land, water, oil, iron ore, and other raw materials that are used in producing goods |
| entrepreneur | someone who operates a business |
| entrepreneurial ability | ability to bring together the other factors of production to successfully produce and sell goods and services |
| firms | suppliers or goods and services |
| circular flow diagram | model that illustrates how participants in markets are linked |
| free market | market with few govt. restrictions on how a good or service can be produced or sold or on how a factor of production can be employed |
| property rights | the rights individuals or firms have to the exclusive use of their property, including the right to buy or sell it |
Combine with other sets
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