ECON 1000 Lecture 2: Chapter 2 Lecture

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11 Feb 2017
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Show production possibilities, how can you produce as a nation in your economy. Maximum that can be produced given the amount of resources. If any point lies outside the ppf, it is beyond our production and non attainable. All points in ppf are inefficient, underutilizing our resources, not producing at maximum possibility. Opportunity cost of having more pizzas is cola being forgone. Opportunity cost of producing 1 more pizza is forgone amount 5 units of cola. Increasing opportunity cost, the more we allocate resources to pizza, the more resources we have to take away from cola =bowed out. Coke and pepsi are the perfect substitute for one another thus they are same opportunity costs, so the graph would have a straight line instead of a curve. Law of increasing opportunity cost= since resources are not substitutional . Increase ability to produce more and more goods and services so the curve of.

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