Economy PPF - Econ 251 Fall 2009 Anca Cristea 27/08/2009...

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Econ 251 Fall 2009 Anca Cristea 27/08/2009 1 Graphical representation of the Production Possibility Frontier for Ann and James: James’ PPF: Ann’s PPF: Slope= -1 Salads 40 40 Sandwiches With the time of one hour, Ann can produce: 40 sandwiches and no salads 40 salads and no sandwiches Or any combination of salads and sandwiches that connects the above two production possibility points Slope= - 3 Salads 10 30 Sandwiches With the time of one hour, James can produce: 30 sandwiches and no salads 10 salads and no sandwiches Or any combination of salads and sandwiches that connects the above two production possibility points
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Econ 251 Fall 2009 Anca Cristea 27/08/2009 2 Combine James and Ann’s production b Economy-wide PPF The PPF for the Economy made up from James and Ann shows the limits to the production of these two goods, given the total resources (i.e., one hour of time) available to produce them. Why is the Economy PPF not a straight line?
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This note was uploaded on 09/27/2009 for the course ECON 251 taught by Professor Blanchard during the Spring '08 term at Purdue University-West Lafayette.

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Economy PPF - Econ 251 Fall 2009 Anca Cristea 27/08/2009...

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