Chapter 2: Economic Models (Scarcity & Tradeoffs)

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Last updated 3:52 AM on 9/30/26
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8 Terms

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<p>Production Possibilities Frontier </p>

Production Possibilities Frontier

Since resources are scarce, all economies face trade-offs. The PPF helps keep track of the tradeoffs.

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What causes the PPF to shift outwards?

Economic Growth

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Comparative Advantage

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What causes economic growth?

Increases in factors of production

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comparative advantage

when one economy has less of an opportunity cost for producing an item

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absolute advantage

when an economy can produce more of a product

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positive economics

“what is happening” “what will happen” based on facts and empirical data

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normative economics

“what should happen” more descriptive, not based on what is currently happening/going to happen