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midterm1 review - opportunity cost The best alternative...

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opportunity cost The best alternative that we forgo, or give up, when we make a choice or a decision. sunk costs Costs that cannotbe avoided, regardless of what isdone in the future, because they have already been incurred. marginalism The process of analyzing the additional or incremental costs or benefits arising from a choice or decision. positive economics An approach to economics that seeks to understand behavior and the operation of systems without making judgments. It describes what exists and how it works. normative economics An approach to economics that analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action. Also called policy economics. production possibility frontier (ppf) A graph that shows all the combinations of goods and services that can be produced if all of society’s resources are used efficiently.
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absolute advantage A producer has an absolute advantage over another in the
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