Economics Foundations Quiz

The boundary between producible and unproducible goods/services given resources and technology.

Limited resources force choices between different goods/services.

Maximizing output given available resources.

Combinations of goods that can be produced using currently available resources and technology, on or inside the PPF.

Combinations outside the PPF that cannot be produced with current resources and technology.

The value of the next best alternative forgone when a choice is made.

Finding the best possible combinations along the PPF.

A point inside the PPF; producing less output than possible with available resources/technology.

Producing fewer goods than what the economy is theoretically capable of, indicating an inefficient use of resources.

Producing the maximum possible amount of goods or services, given the available resources and technology, choosing one good over another.

An exchange where gaining something usually involves giving up something else.

The number of bikes that must be given up to produce one more smartphone, measured along the PPF.

As more smartphones are produced, the opportunity cost of each additional smartphone increases.

The steepness of the PPF reflects the opportunity cost - the higher the slope, the greater the opportunity cost.

The opportunity cost of one item is the amount of another item that is given up in exchange.

The sustained expansion of production possibilities, meaning an economy can produce more goods and services over time.

Goods that are used to produce other goods and services, like factories or machines.

When an economy's production possibilities expand, its PPF shifts outward, meaning it can produce more of both goods.

The ability of a person or nation to produce more of a good or service using the same amount of resources compared to another person or nation.

The ability of a person or nation to produce a good or service at a lower opportunity cost than another person or nation.

When individuals or nations focus on producing goods and services where they have a comparative advantage and then trade with others to get the goods they want.

The amount of salads you have to sacrifice to produce one more smoothie.

When individuals specialize in producing what they're best at, the overall economy becomes more efficient and can produce more goods.

As a society produces more of one good, the opportunity cost of producing more of it increases, making us give up increasingly larger amounts of the other good.

The value of the other goods and services that are given up to build and use wind turbines, including the cost of transmission lines and the potential loss of electricity when wind is weak.

Liz has a lower opportunity cost of producing smoothies than Joe, meaning she gives up fewer salads per smoothie.

Joe has a lower opportunity cost of producing salads than Liz, meaning he gives up fewer smoothies per salad.

Focusing on producing goods or services in which one has a comparative advantage.

The increase in total output and consumption that occurs when individuals or countries specialize in producing goods where they have a comparative advantage and trade with others.

Liz specializes in smoothies, Joe in salads. They trade, Liz gets more salads, Joe gets more smoothies. Both benefit from specialization and trade.

Liz and Joe consume outside their PPFs, meaning they have more of both goods after trade than they could have produced on their own.

Specialization and trade allow individuals and countries to consume beyond what they could produce on their own, leading to greater overall efficiency.