ECON 1001 Lecture Notes - Lecture 3: Technological Change
Document Summary
Shows maximum amount of potatoes the economy can produce for a given number of computers, can only produce what is underneath the line. Why does the line bend the way it does: the prices were fixed in the muffin and coffee example, so it was a straight line the whole time. What is introduced with the bend is that opportunity for those offers to differ depending on how much it costs. As we try to produce more and more computers the(cid:455) (cid:271)e(cid:272)o(cid:373)e (cid:373)ore a(cid:374)d (cid:373)ore e(cid:454)pe(cid:374)si(cid:448)e. we do(cid:374)"t (cid:271)elie(cid:448)e all fa(cid:272)tors of produ(cid:272)tio(cid:374)s are the same. A farmer will take 2 hours to make 1 unit of computers and take 1 hour to make 1 bag of potatoes: ppb (production possibility boundary) for techie. Opp cost of computer= bag of potatoes. Opp cost of computer= 2 bags of potatoes. What does it cost to produce the first computer? bag of potatoes.
