Econ Ch. 2
An economy is said to have a comparative advantage in the production of a good if it can produce that good...
at lower opportunity cost than another economy
If an economy has to sacrifice only one unit of good X for each unit of good Y produced throughout the revenant range, then its production possibility frontier has a...
constant and negative slope
The simplest circular-flow model shows the interaction between households and firms. In this model:
firms supply good and services to households; households in turn, supply factors of production to firms.
If Poland decides to increase the production of steel-- and decrease the production of vodka-- the production possibility frontier would suggest that there will be an _____ opportunity cost of producing more steel.
increasing
The fact that a society's production possibility frontier is bowed out or concave to the origin of a graph demonstrates the law of...
increasing opportunity cost
As long as people have different ____, everyone has a comparative advantage in something.
opportunity cost
Free trade between countries...
will allow for greater levels of consumption than without trade.
