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lectur12-page15 - What technology we currently have is all...

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15 THE PRODUCTION POSSIBILITIES CURVE: Lets make some initial assumptions associated with the PPC 1. All resources are utilized and are fixed. 2. Technology is not changing. 3. Resources are not perfectly mobile. 4. There are only two commodities. All resources are utilized and fixed means that all land, capital, labor, and entrepreneurship are being utilized to produce goods and services; and what quantity of those resources we currently have are all we are going to get. We are also assuming that technology is “fixed.” We are going to assume for a short while that no new technology is coming down the pipeline.
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Unformatted text preview: What technology we currently have is all we have to work with. We also are going to assume that resources are not perfectly mobile. This is a realistic assumption relative to the first two. In our previous student/studying example, we implied resources WHERE perfectly mobile. One hour of study in ag. econ. was just as productive as one hour of student in the livestock course. Most resources are not perfectly mobile. A resource used in agricultural production may not be as productive if used in non-agricultural production....
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