ECON-101 Lecture 4 notes – second part of chapter 2:
• A second economic model:
Production possibilities frontier (PPF) is a graph that shows the various combinations of
outputs that the economy can possibly produce given the available factors of production
and technology. o Opportunity cost could be understood like with each increase of the car
production, we would decrease more amount of computer. And the
decrease amount of computer is called opportunity cost. o Question: why improved the technology for producing computer also
cause the increase quantity of cars produced?
1. Better technology could decrease the workers’ amount and those
workers could go help producing cars.
2. Better technology could decrease the resources we used to produce