Chapter 1, Section 3: Opportunity Costs

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Why is sacrifice an important element of economic choice? What assumptions are involved in creating a production-possibilities curve? Why might future production possibilities differ from current production possibilities?

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4 Terms

1
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trade-off

the sacrificing of one good for another

2
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opportunity cost

the cost of the trade-off (the value of the next best alternative that is given up to obtain the preferred item)

3
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production possibilities curve

a graph that shows the possible combinations of two goods or services that can be produced within a stated time period

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