Chapter 2: Production Possibilities

Absolute advantage

________ is the ability to produce something with fewer resources or to produce more with the same resources as another producer.

Comparative advantage

________ is the ability to produce a good or service at a lower opportunity cost than another producer.

Models

________ are used in economics and most other sciences to represent reality.

Normative economics deals

________ with value judgments and decisions regarding how things should be.

Positive economics

________ is more objective and provides descriptions of how things are.

production possibilities model

The ________, is one of the most basic and useful models in economics.

the three basic economic questions

What to produce
How to produce it?
For whom to produce?