Chp2-The Economic Problem

Chp2-The Economic Problem - 2-1CHAPTER 2The Economic...

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Unformatted text preview: 2-1CHAPTER 2The Economic ProblemAll economies focus on two things:ProductionandConsumptionProduction Possibilities Frontier:All possible combinations of output that can be produced with given Inputs/resources and technology 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)(refer in notebook)Downward sloping – why?Model talks about scarcity Necessity of tradeoffsWhat is the o.c of moving from point A to D?Or what is the o.c. of the first five pizzas? - 5 CDsPoints on or inside the PPF are attainable A D E BPoints outside the PPF are unattainableC F GPoints inside the PPF are inefficientEconomic Efficiency Society getting the most it can from its scarce resourcesGovernment taking concern for the poor groups of societyPoints inside the PPF are wasted, misallocated or idleQuestion: what is the o.c. of moving from point E to XA: 0 points are wastedO.C. (Opportunity Cost) is zero if you do nothing2-6Points on the PPF are efficient 2-7...
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This note was uploaded on 04/02/2010 for the course ECON econ101 taught by Professor Trimarchi during the Fall '09 term at Waterloo.

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Chp2-The Economic Problem - 2-1CHAPTER 2The Economic...

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