EC101-2SPRING09b - 2-1CHAPTER 2The Economic ProblemAll...

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Unformatted text preview: 2-1CHAPTER 2The Economic ProblemAll economies focus on two things:Production Possibilities Frontier:2-2Diagram of the Production Possibilities Frontier2-3Attainable Versus the Unattainable RegionLabel the Attainable RegionLabel the Unattainable RegionList the Attainable PointsList the Unattainable Points2-4Opportunity Costs Along the Production Possibilities Frontier2-5Characteristics of the Production Possibilities Frontier (PPF)2-6The Slope of the PPFoExercise: Good YGood X2-7 The Reciprocal of the Slope of the PPFoExercise: 2-8Constant Opportunity CostsoOpportunity costs are constant because resources are NOT specializedoThey are equally suited to the production of both goodsoResources are homogenous (identical)Production Possibilities Schedule for Bottles of Water and CDsPointBottles of WaterCDsA10B18C26D34E42F5CDs2-9BW2-10Increasing Opportunity CostsOpportunity costs are increasing because resources are specialized...
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EC101-2SPRING09b - 2-1CHAPTER 2The Economic ProblemAll...

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