Chapter 2 The Economic Problem

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

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Unformatted text preview: 2­1 CHAPTER 2 The Economic Problem o All economies focus on two things: o Production Possibilities Frontier: 2­2 Diagram of the Production Possibilities Frontier 2­3 Attainable Versus the Unattainable Region Label the Attainable Region Label the Unattainable Region List the Attainable Points List the Unattainable Points 2­4 Opportunity Costs Along the Production Possibilities Frontier 2­5 Characteristics of the Production Possibilities Frontier (PPF) 2­6 Slope of the PPF o Exercise: Good Y Good X 2­7 Reciprocal of the Slope of the PPF o Exercise: 2­8 Constant Opportunity Costs Production Possibilities Schedule for Bottles of Water and CDs Point Bottles of Water CDs CDs 2­9 BW 2­10 Increasing Opportunity Costs Production Possibilities Schedule for Bottles of Water and CDs Point Bottles of Water CDs CDs 2­11 BW 2­12 Economic Growth o Represented by an outward shift of the PPF: Guns Butter 2­13 2­14 Economic Growth Guns Butter 2­15 2­16 Trade and Efficiency Comparative Advantage Absolute Advantage 2­17 2­18 2­19 Comparative Advantage Example France and Germany each produce wine and beer using a single homogeneous input – labour Their production possibilities are: 2­20 Complete Table One and determine how much wine and beer one unit of labour can produce in France and in Germany Table One: Bottles produced by 1 unit of labour: Wine France Germany Beer 2­21 Complete Table Two and determine the opportunity costs of wine and beer for each economy Table Two: Opportunity Cost of 1 Additional Bottle Wine France Germany Beer 2­22 Germany Wine Beer 2­23 France Wine Beer ...
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Chapter 2 The Economic Problem - 2­1 CHAPTER 2 The...

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