PPCs, Comparative Advantage, and Trade

Specialization

the process where individuals, businesses, or countries concentrate on producing a particular good or service, often because they have a comparative advantage in it

terms of trade

rate at which one good can be exchanged for another

mutually beneficial terms of trade

any price per item that is between the opportunity cost of the producer and the buyer for the same item

changing technology/resources (quality or quantity)

causes of a shift in the PPC

trade

enables countries to consume outside the PPC

economic growth

increase in the 4 factors of production

comparative advantage

when a country can produce a product with the lowest opportunity cost

absolute advantage

when a country can produce for of a product than another country

output

how many units a country can produce with their maximized resources

input

how many resources it takes to produce an equal amount of a good

OOO (other goes over)

mnemonic device for calculating the opportunity cost when given outputs

IOU (other goes under)

mnemonic device for calculating the opportunity cost when given inputs