econ sux's a fat one
Terms in this set (7)
production possibility frontier (PPF)
The set of all combinations of outputs that can be efficiently produced. Note that efficiency requires full employment of all resources and production at maximum productivity.
The amount of output (in kg, lb., gal., #, etc.) that can be produced per unit of labor input (in hours, days, weeks, etc.). For example, 10 kg of oranges per day or 1,500 gal. of wine per hour.
The amount of labor (in hours, days, weeks, etc.) needed to produce a unit of output (in kg, lb., gal., #, etc.). [For example, 1/100 hour of labor per orange; or, 130 workers/kiloton of steel]
production set (PPS)
The set of all combinations of outputs that can feasibly be produced. Note that output combinations that can be achieved with less than full employment of resources and/or less than maximum productivity are feasible and thus are contained with the PPS.
opportunity cost of production
The amount of one good that must be given up in production in order to produce one unit of another good. Opportunity cost is the slope of the PPF and represents the idea that when production efficiency is maintained, to produce more of one good requires diverting resources from the production of another good.
An advantage that one person (or one country) has over another when a product can be produced cheaper (i.e., lower labor cost) and has greater efficiency in production (higher productivity).
An advantage that one person (or one country) has over another when a product can be produced at a lower opportunity cost.
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