1. What is a production possibilities curve and what does it show about a producer's options?

2. Why is the production possibilities curve downward-sloping?

1. How does the production possibilities curve illustrate opportunity cost?

2. Why does opportunity cost increase as a company produces more of one product?

3. How would a production possibilities curve look if opportunity cost were constant?

1. What is efficient production and where does it occur on a production possibilities curve?

2. What is inefficient production and what does it indicate about a company's resource use?

3. What is unattainable production and why does it occur?

1. What is economic growth and how does it affect the production possibilities curve?

2. What are three ways that economic growth can occur?

3. How does the production possibilities curve shift when resources or productivity decrease?

1. What is comparative advantage and how is it determined?

2. How do you calculate the opportunity cost of producing one good to determine comparative advantage?

3. How does comparative advantage differ from absolute advantage?

4. Why do both producers benefit from specialization and trade even if one has absolute advantage in both goods?

1. What industries has the Midwest specialized in and what resources give it comparative advantage?

2. Why has Silicon Valley developed a comparative advantage in technology?

3. How has regional specialization led to gains from trade across the United States?

1. What does it mean for trade to be mutually beneficial?

2. How can both producers benefit from specialization and trade even if they consume the same quantities as before?

3. What are gains from trade and why do they occur?

1. What is division of labor and how does it relate to specialization?

2. How did division of labor increase productivity during the Industrial Revolution?

3. How is division of labor used in modern manufacturing and what benefits does it provide?