ECON 102 Lecture Notes - Opportunity Cost, Absolute Advantage, Comparative Advantage
16 Oct 2011
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Ultimately, the level of production will determine the level of consumption. All possible combinations of outputs that can be produced with given inputs and technology. The slope of the ppf gives the opportunity cost of producing one more unit of the good on the x-axis. Points outside the ppf are currently unattainable. Points on and inside the ppf are attainable. Efficiency: society getting the most it can from its scarce resources. Sometimes in an economy the goals of equity and efficiency conflict. Trying to help poor groups in society get an equal distribution of income (or an equal slice of the economic pie) Calculate the slope of the ppf below and indicate the opportunity cost of producing one more unit of good x. Calculate the reciprocal of the slope of the ppf below and indicate the opportunity cost of producing one more unit of good y. Opportunity costs are constant because resources are not specialized.
