ECON 1B03 Lecture Notes - Lecture 1: Productive Efficiency

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ECON 1B03 Full Course Notes
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ECON 1B03 Full Course Notes
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Production possibilities: the small economy of westdale, like most economies, produces a variety of goods and services. Let"s keep it really simple and assume westdale only produces two goods, smart phones and trucks. Westdale"s production (like all economies) is constrained by two things: its resources endowment, an economy at any point in time only has so many resources available for production, its current technology. It has one best way to produce and that"s that. Think of these constraints as if we are talking a snapshot of the economy- the resources and technology are captured in the moment: over time, these can change. Westdale will be producing smart phones and trucks efficiently if it is using all its resources, given its current technology. That means all available resources are being used. No labour sitting around or unemployed, no machines sitting idle, no productive land undeveloped . The economy would be producing as much as it could at that time.

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