Principles of Microeconomics Chapter 1-7 Key Concepts and Terms questions and answers Rated A+

Principles of Microeconomics Chapter
17 Key Concepts and Terms




opportunity costs - answerswhat you give up to obtain an item

incentives - answerssomething that induces a person to act

postive economic statements - answersclaims that attempt to describe the worlds as it
is

normative economic statements - answersclaims that attempt to prescribe how the
world should be

production possibilities frontier (PPF) - answersgraph that shows the various
combinations of output that the economy can possibly produce given the available
factors of productions and the available production technology that firms use to turn
these factors into output

key points of the PPF curve - answers1. increasing opportunity cost of producin the
same good causes a company with the superior resource to substitute to the inferior
resource
2. inputs and resources are not the same - every resource has a comparative
advantage
3. to maximize efficiency, we should specialize b/c specializing and trading yields
economically more efficient results than producing both items individually

increasing marginal cost at the extensive margin - answersif we want to produce more,
we have to switch to less efficient resources