Module3Slides.ppt - Microeconomics in Modules and Economics in Modules Third Edition Krugman/Wells MODULE 3 The Production Possibility Frontier Model

Module3Slides.ppt - Microeconomics in Modules and Economics...

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Krugman/Wells Microeconomics in Modules and Economics in Modules Third Edition MODULE 3 The Production Possibility Frontier Model
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What You Will Learn What You Will Learn The importance of trade-offs in economic analysis What the production possibilities curve model tells us about efficiency, opportunity cost, and economic growth The two sources of economic growth —increases in the availability of resources and improvements in technology 2 of 11 1 2 3
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Trade-offs: The Production Possibility Frontier People make a trade-off when they give up something to get something else. The production possibility frontier (PPF) Illustrates the trade-offs facing an economy that produces only two goods. Shows the maximum quantity of one good that can be produced for any given production of the other. 3 of 11
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The Production Possibility Frontier
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Efficiency The PPF illustrates efficiency. An economy is efficient if there is no way to make anyone better off without making at least one person worse off.
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