Lecture Notes: PPF, Opportunity Cost, Growth, and Trade – Vocabulary Flashcards

Vocabulary flashcards covering key concepts from the notes on PPF, attainable/attainable combinations, growth drivers, and comparative/absolute advantage.

Production Possibility Frontier (PPF)

The boundary showing all attainable combinations of two goods that can be produced with available resources.

Attainable combinations

Points on or inside the PPF that can be produced with current resources.

Unattainable combinations

Points beyond the PPF that cannot be produced with current resources.

Efficient production

Producing on the PPF line, using resources fully.

Inefficient production

Producing inside the PPF, with underused resources.

Free lunch

Gaining more output by moving from inside the PPF to the boundary without using extra resources.

Opportunity cost

The value of the next best alternative forgone to obtain more of something, often computed as forgone divided by gained.

Economic Growth

A sustained expansion of a country's production possibilities.

Technology

Advances that shift the production possibilities outward, contributing to growth.

Human capital

The quality of labor improved through education, on-the-job training, and work experience.

Capital

Machinery and physical assets that increase productive capacity.

Absolute Advantage

Being more productive than others—using fewer inputs or time, or producing more units.

Comparative Advantage

Ability to produce at a lower opportunity cost than others.

Specialization

The skills and experience gained from focusing on a particular task.