Term
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Definition
| Things that are produced then used in the production of other goods and services |
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Term
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Definition
| The basic resources available to a society |
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Term
| Three key factors of production |
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Definition
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Term
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Definition
| The process that transforms scarce resources into useful goods and services. |
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Term
| Theory of Comparative Advantage |
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Definition
| specialization and free trade will benefit all trading parties, even when some are "absolutely" more efficient producers than others |
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Term
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Definition
| A producer has an absolute advantage over another in the production of a good or service if he or she can produce the good or service using fewer resources, including time. |
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Term
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Definition
| A producer has comparative advantage over another in the production of a good or service if he or she can produce the good or service at a lower opportunity cost. |
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Term
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Definition
| Goods for present consumption |
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Term
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Definition
| The process of using resources to produce new capital |
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Term
| Production Possibility Frontier (PPF) |
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Definition
| illustrates the principles of constrained choice, opportunity cost, and scarcity |
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Term
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Definition
| In addition to operating on the PPF, the economy must be operating at the right point on the PPF |
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Term
| Marginal Rate of Transformation (MRT) |
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Definition
| The slope of the production possibility frontier |
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