Principles of Economics Chapter 2

If a nation has the lowest opportunity cost of producing a good, that nation has a(n) ______ in the production of that good

comparative advantage

In general, individuals and nations should specialize in producing goods ______ other individuals or nations.

for which they have a lower opportunity cost compared to

The fundamental reason firms outsource is that:

hiring low-wage workers overseas reduces firms' costs.

Suppose Colin brews beer and makes cheese. If Colin can increase his production of beer without decreasing his production of cheese, then he is producing at an:

inefficient point.

Points that lie below the production possibilities curve are inefficient because:

more of one good could be produced without producing less of the other.

Production possibilities curves for large economies are generally bow-shaped because:

opportunity costs tend to increase with increases in production.

Regarding specialization, it is generally true that:

specialization imposes costs as well as benefits.