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Economics Chapter 3

Economics Chapter 3 - o High opp Cost for one good=low opp...

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Economics Chapter 3 Comparative Advantage: The Driving Force of Specialization Absolute advantage - The ability to produce a good using fewer inputs than another producer Comparative advantage - the ability to produce a good at a lower oppotuniry cost than another producer A person can have absolute advantages in many goods, but not comparative advantage Opportunity cost of one good is the inverse of the opportunity cost of another
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Unformatted text preview: o High opp. Cost for one good=low opp. Cost for another good • When each person specializes in producing the good in which they have a comparative advantage, total production in economy rises Trade Imports- goods produced abroad and sold domestically Exports- goods produced domestically and sold abroad...
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