ECON 2002.01 Lecture 3: Production Possibilities Curve
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ECON 2002.01 Full Course Notes
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Usually dealing with some sort of constraint - scarcity. |slope of cpc| = marginal opp. cost of good on x in terms of good on y i. ii. Production possibilities model shows the g&s an economy is capable of producing, its opportunities, given its resources and technology. An economic system is the set of rules that define how an economy"s resources are. To be owned and how decisions about their use are to be made. Constraint is factors of production - the resources available to the economy for production iv. iii. Land - resources of nature that can be used for production. Can be used for production (oil) i. ii. i. Labor - human effort that can be applied to the production of g&s. Capital - has been produced for use in the production of other g&s. i. ii. Can be used to produce other g&s. iii. Natural ability - an untrained, uneducated person brings to a particular production process.