Principles of Macroeconomics Chapter 2 The Economic Problem: Scarcity and Choice
According to the theory of comparative advantage, specialization and free trade will benefit _____
All trading parties, even when some are absolutely more efficient producers than others
Someone has a comparative advantage in producing a good if they can produce that good ________.
At a lower opportunity cost
Refers to things that have already been produced that are in turn used to produce other goods and services.
Capital
Because resources are scarce, the opportunity cost of investment in capital is ____.
Forgone present consumption
Outputs in the production process are _____.
Good and services of value to households
The process of using resources to produce new capital is _____.
Investment
Which word is NOT a resource as the term is used by economists?
Money
If the unemployment rate increases from 10% to 14%, the economy will _______.
Move away from the PPF toward the origin
Suppose you are deciding whether to spend your tax rebate check on a new iPod player or a new digital camera. You are doing with the concept of ______
Opportunity costs
Periods of less than full employment correspond to _______.
Points underneath the PPF
The process by which resources are transformed into useful forms is _____.
Production
The opportunity cost of investment in capital is foregone present consumption because _______.
Resources are scarce
An example of forgoing present benefits in order to receive future benefits is _____.
Saving
The concept of opportunity cost is based on the principle of _____.
Scarcity
The concept of trade-offs would become irrelevant if ______
Scarcity was eliminated
In economics, investment always refers to _______.
The creation of capital
An example of an investment is _____.
The purchase of a Hewlett-Packard Packard laser printer for use by a business
When two people trade _________.
They both expect to be made better off by the exchange
If someone has a comparative advantage in growing pineapples,
They can grow pineapples at a lower opportunity coast than other pineapple growers
According to the theory of comparative advantage, ______ raise(s) productivity by lowering opportunity costs.
Trade and specialization