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Basic Economic Problem Resources are Scarce but wants are infinite
Production Possibility Frontier A curve showing the maximum potential level of
output of one good given a level of output for all
other goods in the economy
Barriers to Entry Factors which make it difficult or impossible for
firms to…

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Factor Immobility When there are difficulties in switching factors
of production from one use to another.
Price Elasticity of Supply Responsiveness of Quantity supplied to a change
in price
Market Mechanism Means by which the forces of demand and
supply determine prices and quantities of goods
and services offered for…

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Market Failure Occurs when there is an inefficient allocation of
resources in the market
Ad Valorem Tax A charge by govt on firms as a % of the value of
the good
Inferior Good A good whose demand falls when incomes rise
Specific (unit) tax A charge by govt on…

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