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Notes on PPC.doc

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Department
Economics
Course
ECON 101
Professor
Eva Lau
Semester
Fall

Description
Notes on PPC 1. Straight line PPC indicates constant trade-off between good X and good Y. It implies that the inputs in question are equally suitable in the production of X and/or Y. A bowed shape PPC implies that inputs are not equally productive in X and/or Y. 2. The slope of the PPC is called the marginal rate of transformation or MRT, which measures what is given up vs. what you get. It measures trade-offs. It measures the opportunity cost of X for Y, or vice versa. It measures production substitution rate. 3. Points on the PPC represents attainable production alternatives. 4. When we are producing alo
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