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Unformatted text preview: Factors of Production: households are sellers and firms are buyers Production Possibilities Frontier-A graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology-Points on the PPF are efficient-Point A = Efficient-Point B = Inefficient Positive Statments-Clainms that attempt to describe the world as it is-Example: Minimum-wage laws cause unemployment Normative Statements-Claims that attempt to prescribe how the world should be-Example: The government should raise minimum wage Chapter Three: Interdepence and The Gains from Trade...
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