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Unformatted text preview: entrepreneurship) to firms. Simple circular model: an illustration of the continuous flow of goods, service, inputs, and payments between firms and householders. 3.3 Production possibilities curve: The potential total output combinations of any two goods for an economy. In short, the economy is not using all its scarce resources efficiently; as a result, actual output is less than potential output. Increasing opportunity cost: The opportunity cost of producing additional units of a good rises as society produces more of that good. The basic reason for the increasing opportunity cost is that some resources and skills cannot be easily adapted from their current uses to alternative uses. Resources tend to be specialized. 3.4...
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This note was uploaded on 02/10/2011 for the course ECO 2251 taught by Professor Kirkland during the Spring '09 term at Troy.
- Spring '09