What does a point inside the PPC indicate?
Inefficient use of resources or unemployment.
What does a point outside the PPC indicate?
Unattainable production with current resources and technology.
What does a shift of the entire PPC outward indicate?
Economic growth due to increased resources or technological advancements.
What does a movement along the PPC represent?
The trade-off between producing two different goods.
What does a PPC bowed out (concave to the origin) indicate?
Increasing opportunity costs as production shifts between goods.
What does a PPC that is a straight line indicate?
Constant opportunity costs as production shifts between goods.
If a technological advancement occurs in only one good, how does the PPC change?
The PPC shifts outward along the axis of the good with the advancement.
How does an increase in labor affect the PPC?
It shifts the PPC outward, allowing for greater production of both goods.
How does a decrease in available resources affect the PPC?
It shifts the PPC inward, reducing the potential production of both goods.
What does the slope of the PPC represent?
The opportunity cost of producing one good in terms of the other.
What is scarcity?
The fundamental economic problem of unlimited wants/needs but limited resources.
Define economics.
The study of how individuals, firms, and governments manage scarcity.
What are trade-offs?
The choices we make due to scarcity; giving up something else.
Define opportunity cost.
The value of the next best alternative you give up when making a decision.
What is physical capital?
Inanimate resources like money, property, and inventories.
What is human capital?
The skills and knowledge of individuals.
Define Production Possibilities.
A table or graph showing the maximum combinations of two goods that can be produced with given resources.
What are factors of production?
The resources used to produce goods and services: land, labor, capital, and entrepreneurship.
Define a market economy.
An economy where buyers and sellers interact freely, based on *Laissez Faire* principles.
What is a mixed economy?
A combination of command and market economic elements.
What is the difference between microeconomics and macroeconomics?
Micro focuses on individual decisions; macro focuses on the entire economy.
Compare a command economy to a market economy.
Command: government control; Market: free interaction of buyers/sellers.
What is the difference between trade-offs and opportunity cost?
Trade-offs are all alternatives forgone; opportunity cost is the *next best* alternative.
Differentiate between physical and human capital.
Physical capital: inanimate resources; human capital: skills and knowledge.
Compare a market economy to a mixed economy.
Market: pure laissez-faire; mixed: some government intervention.
What are the differences between land and capital as factors of production?
Land: natural resources; capital: man-made resources used in production.
Compare a traditional economy to a command economy.
Traditional: based on customs; command: central planning by the government.
What is the difference between scarcity and a shortage?
Scarcity: permanent, limited resources; Shortage: temporary, quantity demanded exceeds quantity supplied.
Compare entrepreneurship to labor as factors of production.
Entrepreneurship: combining resources; labor: skills and abilities of workers.
What is the difference between a trade-off and a budget constraint?
Trade-off: general alternatives; budget constraint: limited income restricting consumption.
