Economics 1021A Chapter 2 - Economics 1021A Chapter 2 The...

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Economics 1021A Chapter 2 The Economic Problem Production possibilities and Opportunity cost - The production possibilities frontier is the boundary between those combinations of goods and services that can be produced and those that cannot o Looking at a model economy with only two goods while holding all other goods and services constant Everything remains the same except the two goods that are being considered Production Efficiency - When producing goods and services are the lowest possible cost o All the points on the PPF - Production inefficiency occurs inside the PPF. o Resources are either unused or misallocated Tradeoff along the PPF - Tradeoffs arise in every imaginable real-world situation - At any given point in time, we have a fixed amount of land, labor, capital and entrepreneurship. By using our available technologies, we can employ these resources to produce goods and services, but we are limited in what we can produce o This limit defines a boundary between what we can attain and what we cannot
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This note was uploaded on 10/16/2011 for the course ENGLISH 101 taught by Professor Parkin during the Summer '11 term at Wilfred Laurier University .

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Economics 1021A Chapter 2 - Economics 1021A Chapter 2 The...

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