Economics 9:13

Economics 9:13 - B A C Point B unattainable Points A and C...

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View Full Document Right Arrow Icon %3Ftype%3DCourse%26id%3D_45478_1%26url%3D We can never get what we want – because our wants are unlimited (multidimensional) How do we satisfy unlimited wants with limited resources? Economics: The study of the allocation of scarce resources to satisfy unlimited ones (in at least one resource) - The need to satisfy these unlimited wants has caused the development of markets and trade Everyone has a scarcity of time Robinson Crusoe Instead of eating 10 candy bars in 10 days, use candy bars to catch birds and fish Fish Birds Catches per candy bar 10 5 Production Possibilities frontier (ppf) = a graph showing the maximal different combinations of output for a given amount of inputs
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Unformatted text preview: B A C Point B unattainable Points A and C both equally efficient Point D inefficient More of one good less of another Illustrates opportunity costs in production (the slope) [rise/run]-in this case 50/100 = 1/2 10x10= 100 Fish/bars 5x10= 50 Birds/bars Economic growth = increase in production of goods and services (If we get 5 more candy bars, opportunity cost goes up in ratio [parallel shift of graph]) As you get better at catching birds, the opportunity cost of fishing goes up If you measure the opportunity cost (increasing, upward sloping) Marginal cost of catching fish in terms of birding Opportunity Cost Best place to produce Marginal Benefit What if catching fish gets harder and harder the more you fish? (removing fish from the pond) – diminishing marginal productivity...
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This note was uploaded on 01/14/2012 for the course ECON 002 taught by Professor Eudey during the Fall '08 term at UPenn.

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Economics 9:13 - B A C Point B unattainable Points A and C...

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