Include at least one example each of land, labor, and capital. C. fewer resources are left to make something else. b. imports and exports. What is the name of the law that states that as we shift factors of production from making one good or service to another, the cost of producing the second item increases? An incisive account, by a historian at Yale, of U.S. and allied economic diplomacy over the past half-century, featuring expert synopses and evaluations of the attitudes, policies, and negotiating stances of Western governments. Mixed nuts: trucks, farm land, farmers, factories, cardboard. Guns or Butter Economists often speak of the way a society allocates its resources between military and consumer spending as a method for choosing guns or butter. Some resources are better suited for use in making the first product. Countries need to choose between two options when spending finite resources, either buying goods that benefit local c Dr. Hudson is a financial economist and historian. In economics, the tradeoff between guns and butter refers to the whole economy, not just the federal branch of government. B. How is the law of increasing costs similar to the concept of decision making at the margin? This may be seen as an analogy for choices between defense and civilian spending in more complex … D. A nation decides to produce fewer fighter jets and more bridges. 45. In some cases, implicit to the argument is that rivalry between nation-states could have emerged as a negative externality of excess investments in „guns‟. Guns by the same amount. What is something you might use to help you make a choice between two seemingly equal alternatives? b. that guns are more important than butter. Of course, guns represent resources allocated to a nation’s defense; butter represents resources allocated for consumer goods. A graph that shows alternative ways to use an economy's productive resources, A line on a production possibilities curve that shows the maximum possible output an economy can produce, The use of resources in such a way as to maximize the output of goods and services, The use of fewer resources than an economy is capable of using, An economic principle which states that as production shifts from making one good or service to another, more and more resources are needed to increase production of the second good or service. D. the amount of money required to buy a car, Something such as air, food, or shelter that is necessary for survival is a. Using the factors of production to make one product always means that. An example of an opportunity cost would be. A phrase that refers to the trade-offs that nations face when choosing whether to produce more or less military or consumer goods is, Deciding whether to do or use one additional unit of some resource is. How are trade-offs and opportunity costs different? It demonstrates the relationship between a nation's investment in defense and civilian goods. Production possibilities analysis is fundamental to economics… guns and butter A classic model of the production possibility curve by using the relationship between "guns", or military spending, and "butter", or food supplies, in a nation's expenditures, in order to demonstrate that the increase of one relies on the decrease of the other. Which of the following is an entrepreneur? choice between butter and guns was a matter of economic policy. Because there are always more than one option to choose from. To start producing butter and still maintain efficiency, the economy would shift the resources that are best at producing butter (or worst at producing guns) first. d. a government can buy unlimited military and civilian goods if it is rich enough. The question that runs throughout the narrative is whether "we can have it all," and the author's conclusion is that by and large we did. Chapter 1 Section Main Menu The Factors of Production • Land All natural resources that are used to produce goods and services. Today’s show: The Vocabulary of Economic Deception. The PPF illustrates a. constant opportunity costs between guns and butter. Why is it important to compare marginal costs to marginal benefits? Any human-made resource that is used to create other goods and/or services is. In economics, the guns versus butter model is the classic example of the production possibility frontier. The various combi-nations of goods (i.e., “guns” or “butter”) that can be produced can be plotted as points on a graph and, when these points are connected, the resultant curve is the PPF. In macroeconomics, the guns versus butter model is an example of a simple production–possibility frontier. This book created a 5-step plan to help you study more effectively, use your preparation time wisely, and get your best score. D. A nation decides to … A. C. a computer repair shop owner who opens a second shop across town, Physical objects such as clothes or shoes are defined as, Limited quantities of resources to meet unlimited wants is a. How does a nation decide what and how much to produce? The economic concept of guns or butter means that a. a person can spend money on either sports equipment or food. Guns and butter explains the relationship between two goods that are important for a nation's long-term economic growth and stability. 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