Econ Chapter 2

Econ Chapter 2 - Chapter 2 : Scarcity , Choice and economic...

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Chapter 2 : Scarcity , Choice and economic structure I. Society’s Production Choices II. Production Possibilities Frontier PPF: a curve showing all combinations of two goods that can be produced with the resources and technology currently available A. Increasing Opportunity Cost according to the law of increasing opportunity cost, the more of something we produce, the greater the opportunity cost of producing even more of it causes PPF to have a concave shape why does opportunity cost increase as we move along PPF? Because most resources are better suited to some purposes than to others B. Search for a Free Food no such thing as free lunch- since resources are used I. Operating Inside the PPF reason: resources are not being used in the most productive way a firm, an industry or an entire economy is productively inefficient if it could produce more of at least one good without pulling resources from the production of any other good inefficiency creates benefits for individuals or groups another reason: recession- unemployment
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This note was uploaded on 02/26/2012 for the course ECON UA-2 taught by Professor Lieberman during the Spring '12 term at NYU.

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Econ Chapter 2 - Chapter 2 : Scarcity , Choice and economic...

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