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Comparative advantage
country's ability to produce a good at lower opportunity cost than the country with which it trades
Absolute advantage
country's ability to produce a good using fewer resources than the country it trades with
Labor specialization
division of labor into specialized activities that allow individuals to be more productive; can result in enormous production
Economic efficiency
Maximum possible production of goods and services generated by the fullest employment of the economy's resources
Underemployed resources
Less than full utilization of a resources productive capabilities; producing much less than what they are capable of producing
Innovation
an idea that eventually takes the form of new, applied technology
Law of increasing costs
opportunity cost of producing each additional unit of capital increases as more of the units are produced; once rich, its easy to get richer, one poor its easy to stay poor
Opportunity cost
quantity of other goods that must be given up to obtain a good; ex. watching your fave shows finale the night before an exam is the 5 pts that could have earned an A
Entrepreneurs
a person who assumes the risk and uncertainties of a business
Human capital
special skills acquired through education or trading; most imp. form of capital; explains high economic performance
Capital
a good used to produce or sell other goods; ex. a hammer used to produce a house
