AP econ Chp 3
Terms in this set (5)
mutually dependent; depending on each other
Interdependence occurs because people are better off when they specialize and trade with others.
the comparison among producers of a good according to their opportunity cost
A.Differences in Costs of Production
B.Two ways to measure differences in costs of production:
a.The number of hours required to produce a unit of output (for example, one pound of potatoes).
b. The opportunity cost of sacrificing one good for another.
- the comparison among producers of a good according to their productivity
A.Describes the productivity of one person, firm, or nation compared to that of another.
B. The producer that requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good.
a.The Rancher needs only 10 minutes to produce an ounce of potatoes, whereas the Farmer needs 15 minutes.
b. The Rancher needs only 20 minutes to produce an ounce of meat, whereas the Farmer needs 60 minutes.
D.The Rancher has an absolute advantage in the production of both meat and potatoes.
—goods produced abroad and sold domestically
—goods produced domestically and sold abroad
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