Principles of Economics 3e Chapter 2 CHOICE IN A WORLD OF SCARCITY

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10 Terms

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Comparative Advantage

The ability of a country to produce a good at a lower opportunity cost than another country.

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Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

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PPF (Production Possibility Frontier)

A curve that shows the maximum feasible amount of two goods that a country can produce with available resources.

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Invisible Hand

A concept that suggests individuals' self-interested behavior can lead to positive social outcomes.

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Self-Interest

The personal gain or advantage that motivates economic behavior.

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Positive Statements

Statements that describe the world as it is, factually and objectively.

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Normative Statements

Statements that describe how the world ought to be, which are subjective and opinion-based.

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Economic Analysis

A method of assessing how individuals, firms, and societies make decisions based on their resources.

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Adam Smith

The economist who wrote The Wealth of Nations and introduced the concept of the invisible hand.

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Flatter PPF

Indicates a lower opportunity cost for one good in relation to another in a given country.