ECON 010 Lecture Notes - Lecture 2: Boeing 787 Dreamliner, Opportunity Cost, Marginal Cost

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Ppf - a diagram that shows the combination of 2 goods that are possible for a society to produce at full employment. If i use all of my resources what are all the possible combinations i can produce for. 20 units of a or 40 units of b incr. B what am i giving up by decr. Does it make sense to import the good from somewhere else. X axis - quantity of small jets; y-axis - quantity of dreamliners. Assumptions for straight line ppf: 2 goods, one input, labor, constant returns to scale (each worker gives the same amount) Point c - points under the curve are feasible but not efficient. Point d - points above the curve are not feasible. In order to consume at this higher part, we need to do something with trade. Points on the line are are feasible and efficient. Trade - to sell at a higher price and buy at a lower price.

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