chapter 4 notes slides

chapter 4 notes slides - Lecture 04 22 September ECON 1000...

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Lecture 04 22 September ECON 1000 Fall 2009 Cohen 1 E C O N O M I C S PARKIN BADE Lecture 4 22 September 2009 Neoclassical Theory How do individuals make choices among scarce resources? important concepts opportunity cost production possibilities frontier Opportunity cost is highest-valued alternative forgone Attainable Maximum Attainable Combinations 0 2 8 10 Beer Pizza 2 4 6 8 4 1 3 5 7 9 10 6 a b c d e f Beer 10 8 6 4 2 0 Pizza 0 1 2 3 4 5 Unattainable Resources: $10 Prices: Beer $ 1 Pizza $ 2
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Lecture 04 22 September ECON 1000 Fall 2009 Cohen 2 Production Possibilities and Opportunity Cost Production possibility frontier ( PPF ) boundary between unattainable and attainable production possibilities shows maximum combinations of outputs given resources and technology continued Attainable Fig. 2.1 Production Possibility Frontier Colas Unattainable Pizza 0 1 2 3 4 5 5 10 15 a b d c f e z PPF characteristics points on PPF represent production efficiency points inside PPF are inefficient points on PPF are preferred to points inside points outside PPF are unattainable Choosing among efficient points on PPF involves an opportunity cost and tradeoffs continued
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This note was uploaded on 01/07/2012 for the course ECON 1000 taught by Professor Paschakis during the Fall '08 term at York University.

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chapter 4 notes slides - Lecture 04 22 September ECON 1000...

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