Scarcity arises because resources (land, labor, capital, etc.) are limited, but human desires and needs are virtually unlimited. This fundamental concept drives the need for economic choices.
Opportunity cost is the value of the next best alternative that must be given up when a choice is made. It is not the total cost, but specifically the most valuable alternative lost.
A bowed-out PPC reflects increasing opportunity costs, meaning producing more of one good requires giving up increasingly larger amounts of the other good due to resource specialization.
Even if a country has an absolute advantage in all goods, it can benefit from trade by specializing in goods where it has a comparative advantage (lower opportunity cost).
A command economy is one where the government makes all major decisions about production and allocation of resources, unlike a market economy where decisions are driven by supply and demand.
