Term
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Definition
One person has an absolute advantage over another if he or she takes fewer hours to perform a task than the other person.
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Term
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Definition
One person has a comparative advantage over another if his or her opportunity cost of performing a task is lower than the other persons opportunity cost.
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Term
| The Principle of Comparative Advantage |
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Definition
Everyone does best when each person (or each country) concentrates on the activities for which his or her opportunity cost is lowest.
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Term
| Production Possibilities Curve |
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Definition
| A graph that describes the maximum amount of one good that can be produced for every possible level of production of the other good. |
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Term
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Definition
Any combination of goods that can be produced using currently available resources.
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Definition
Any combination of goods that cannot be produced using currently available resources.
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Term
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Definition
Any combination of goods for which currently available resources enable an increase in the production of one good without a reduction in the production of another.
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Term
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Definition
Any combination of goods for which currently available resources do not allow an increase in the production of one good without a reduction in the production of the other.
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Term
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Definition
A term increasingly used to connate having services performed by low wage workers overseas.
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