EC 201 Lecture 2: Chapter 2 Lecture
Document Summary
Econ 201 agenda 09/28/16: chapter 2 lecture, sapling h. w. (chapter 1 and 2 due saturday/sunday 11:55pm, questions. Simplified representation of reality in the economy: ex: cigarettes in ww2 prison camps. Simulating an economy on a computer: ex: tax models, forecasting models. Trade-offs: the production possibility frontier: illustrates the trade-offs facing a simple economy that produces two goods, maximum quantity of one good that can be produced for any given production of the other good. Efficiency: production, allocation of resources, distribution and consumption. Factor of production: land, labor, tech, natural resources, capital and infrastructure, trade-off in production: opportunity cost of computer and rose production, opp. cost of rose production between a and b, computers/roses = y2 y1/x2 x1 o. Shows economic growth: an increase in the productive capacities in an economy over a sustained period of time, an increase in the factors of production increases economic activity and leads to economic growth: can expand production level.
