Econ 1101 Lecture Notes - Opportunity Cost and Trade

Flashcards covering key economic concepts from Econ 1101, including opportunity cost, production possibilities frontier, and gains from trade.

Opportunity Cost

The value of the highest-valued alternative use of that resource.

Production Possibilities Frontier

Shows the combinations of output that the economy can possibly produce.

Efficient Outcome (in PPF context)

An economy which is getting all it can from the scarce resources it has available. Points on the PPF represent efficient levels of production.

Absolute advantage

The ability to produce a good using fewer inputs than another producer.

Comparative advantage

The ability to produce a good at a lower opportunity cost than another producer.

Gains from trade

Total increase in consumption of goods and services made possible by specialization of production and trade.