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In one well-known social psychological experiment, research participants were brought into a dark room where an experimenter projected dots of light. These dots of light appeared to move slightly as they were projected-though exactly how far they moved the participants couldn't say. When asked to estimate the distance that the light traveled, participants tended to look to others in the room, and ask them what they thought. All of the participants thus ended up giving somewhat similar answers-thereby establishing ____.
Comparative Advantage
The capability of a person, business, or nation to generate a product or offer a service with a lesser opportunity cost compared to its rivals.
Absolute Advantage
The ability of an individual, company, or country to produce more of a good or service with the same amount of resources as others.
Production Possibilities
Production possibilities involve the various combinations of different goods or services that can be produced in a given economy with available resources and technology, illustrated by the production possibilities frontier.
Production Possibilities Curve
A graphical representation that shows the various combinations of two products that an economy can produce using all its resources efficiently.
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