Chapter preview: In this introductory chapter, we look at the fundamental concerns of economics and why these concerns arise. Also, we will develop the concept of opportunity cost that is embodied in the popular phrase “There’s no such thing as a free lunch.” Finally, we will consider a diagram (the production possibility frontier) that will permit us to use opportunity cost to explore the benefits flowing from trade.
By the end of this chapter, you will be able to:
- Identify the three fundamental economic questions.
- Explain why a production possibility frontier has a negative slope and why that slope depicts the concept of opportunity cost.
- Interpret what is depicted by a production possibility frontier.
- Explain ...
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