econ lecture 2 - Recall The opportunity cost of an item is...

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1/31/2011 Recall: The opportunity cost of an item is what must be given up to obtain that item Economic growth shifts the PPF outward. With additional resources or an improvement in technology, the economy can produce more computers, more wheat, or any combination in between. The shape of the PPF The PPF can be a straight line or bow-shaped Depends on what happens to opportunity cost as economy shifts resources from one industry to the other o If opp. cost remains constant, the PPF is a straight line o If opp. cost of a good rises as the economy produces more of the good, PPF is bow-shaped The PPF is bow-shaped when different workers have different skills, different
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This note was uploaded on 02/01/2012 for the course MICROECONO 102 taught by Professor Prusa during the Fall '09 term at Rutgers.

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