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Lecture 9

ECON 1010 Lecture 9: Lecture 9

3 Pages

Course Code
ECON 1010
Laura K.Brown

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OS98 1. Production possibilities frontier: a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology 2. Resources are scarce, therefore not every conceivable outcome is feasible 3. This graph is a function: the relationship between two variables 4. With the resources it has, the economy can produce at any point on or inside the production possibilities frontier, but it cannot produce at points outside the frontier 5. An outcome is said to be efficient if the economy is getting all it can from the scarce resources it has available 6. Points on (rather than inside) the production possibilities frontier represent efficient levels of production 7. When the economy is producing less than it could from the resources it has available, it is said to be inefficient 8. The gap between what is being produced and what could be possible on the frontier is called an output gap 9. Being inefficient leads to idle factories and unemployment 10.If the source of the ineffi
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