Lecture 4 Jan 28

Lecture 4 Jan 28 - Announcements • While I won’t really...

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Unformatted text preview: Announcements • While I won’t really talk about Ch 3 in class r ight now, I still recommend that you read it. (there are “practice” HW problems for ch3 on Aplia) • We will star t ch 4 on Fr iday. • HW due Monday has 2 graded par ts. I ncreasing oppor tunity cost • PPFs are bowed out from the or igin. • This is because not all of society’s inputs are equally good at making each product. • I n other words, as we make more and more of one good, we are using more and more of society’s resources to make that good. • Some of those resources may not be well suited producing the product. • I f this is the case, you would have to use A LOT of those resources to make even a little more output (thus leaving less for the other product that society makes). 2 of 34 PPF Example 3 of 34 Option Butter (million lbs.) Robots (thousands) A 5 B 2 4 C 3 3 D 4 2 E 5 This is a PPF schedule PPF Example 4 of 34 Optio n Butte r (milli on lbs.) Robo ts (thou sands ) A 5 B 2 4 C 3 3 D 4 2 E 5 SCARCITY, CHOICE, AND OPPORTUNITY COST Negative Slope and Opportunity Cost mar ginal r ate of tr ansfor mation (M RT) The slope of the production possibility frontier (ppf). Production Possibility Schedule for Total Corn and Wheat Production in Ohio and Kansas POINT ON PPF TOTAL CORN PRODUCTION (MILLIONS OF BUSHELS PER YEAR) TOTAL WHEAT PRODUCTION (MILLIONS OF BUSHELS PER YEAR) A 700 100 B 650 200 C 510 380 D 400 500 E 300 550 SCARCITY, CHOICE, AND OPPORTUNITY COST The Law of I ncr easing Oppor tunity Cost: As society makes more of one output good, it needs to give up more and more of the other output good. Corn and Wheat Production in Ohio and Kansas SCARCITY, CHOICE, AND OPPORTUNITY COST Economic Gr owth economic gr owth An increase in the total output of an economy. I t occurs when a society acquires new resources or when it learns to produce more using existing resources. Increasing Productivity in Corn and Wheat Production in the United States, 1935–2006 CORN WHEAT Yield Per Acre (Bushels) Labor Hours Per 100 Bushels Yield Per Acre (Bushels) Labor Hours Per 100 Bushels 1935–1939 1945–1949 1955–1959 1965–1969 1975–1979 1981–1985 1985–1990 1990–1995 1998 2001 2006 26.1 36.136....
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This note was uploaded on 08/15/2011 for the course ECON 2005 taught by Professor Zirkle during the Spring '07 term at Virginia Tech.

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Lecture 4 Jan 28 - Announcements • While I won’t really...

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