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LU 1 : INTRODUCTION (10 PRINCIPLES OF ECONOMICS ((1) People face trade-off…
LU 1 : INTRODUCTION
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ECONOMICS MODEL
1) Circular Flow Diagram: visual model shows how dollar flows
-markets Goods & Service
-markets Factor Production
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Positive & normative
1) Positive statement – describe the world
2) Normative statement – describe how the world should be
Opportunity cost & Comparative advantage
Application of comparative advantage
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Comparative advantage & trade
• Comparative advantage and differences in opportunity cost are basis for specialized production and trade
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