lecture2 - Think Like An Economist Objectives Today's...

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Think Like An Economist
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Objectives Today’s Lecture: Production possibilities Scarcity, Opportunity Cost, Trade-Offs Marginal Cost Production Growth
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Unlimited Wants - Limited Resources Allocating Scarce Resources Model: Assume 2 goods Hold the quantities of all other goods and services constant Production possibilities frontier ( PPF ): boundary between those combinations of goods and services that can be produced and those that cannot.
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Production Possibility Frontier Production Possibility Schedule Guns Butter 0 15 1 14 2 12 3 9 4 5 5 0 Guns Butter 1 2 3 4 5 2 A B C D E F 1 3 4 5 6 7 8 9 10 11 12 13 14 15
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Production Possibilities Attainable points Unattainable points Production Efficiency Trade-offs Guns Butter 1 2 3 4 5 2 A B C D E F 1 3 4 5 6 7 8 9 10 11 12 13 14 15 Attainable Unattainable
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Cost Opportunity Cost Move from C to D the opportunity cost ” of the increase in guns is the decrease in butter. The highest-valued
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lecture2 - Think Like An Economist Objectives Today's...

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