Chapter 2 The Production Possibility Model, Trade, and Globalization

Chapter 2 The Production Possibility Model, Trade, and Globalization

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Unformatted text preview: Chapter 2: The Production Possibility Model, T rade, and Globalization The Production Possibility Table Production possibility table is a table that lists opp costs by showing alternative outputs with given inputs. Study time/grade example An output is a result of an activity; an input is what you put into it. Production possibility curve (PPC) is a curve measuring maximum combination of outputs that can be obtained from a given number of inputs. PPC slopes downward from left to right as there exists an inverse relationship between X and Y. PPC demonstrate: 1. Limit to what you can achieve given the parameters 2. Every choice has an opportunity cost get more of something by giving up something else. Principle of increasing marginal opportunity cost in order to get more of something one must give up ever increasing quantities of something else. PPC curve outwards because some sources are better suited for production than other goods....
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This note was uploaded on 02/23/2011 for the course ECON 2010 taught by Professor Moonjung during the Spring '09 term at UVA.

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Chapter 2 The Production Possibility Model, Trade, and Globalization

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