Econ Chapters 1-3

efficient

economy is getting al it can from the available resources

positive statements

claims that attempt to describe the world as it is (scientists, descriptive, face based)

normative statements

claims taht attempt to prescribe how the world should be (policy advisors, prescriptive, based on values)

rational people

people who systematically and purposefully do the best they can to reach their goals/objectives (MB>MC)

a market fails due to…

externality or market power

externality

the impact of one’s actions on the well-being of a bystander (ex: pollution)

market power

the ability of a single economic actor (or small group) to have a strong influence on market prices (almost like a monopoly)

productivity

the quality of good/services produced from each unit of labor input

slope on a PPF represents…

opportunity cost in absolute value

PPF shifts outwards due to…

technological advancements and/or increased resources

productivity increases, living standards…

increase

For both parties to gain, trade must be…

between their opportunity costs

One will ALWAYS have comparative advantage over at least one good

no, they might have same opportunity cost