ECON 0110 Lecture Notes - Lecture 3: Capital Good, Underemployment, Opportunity Cost

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13 Feb 2015
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A graph that shows all combinations of two goods or services that can be produced if all of society s resources are used efficiently. The ppf illustrates the trade offs facing an economy that produces only two goods. It shows the maximum quantity of one good that can be produced for any given quantity of the other. The factors of production are: land or raw materials labor capital (plant & equipment) entrepreneurship. Ppf shows maximum output possibilities that are available. Points outside the ppf are not possible given current resources and technology. By better utilization of resources, we could achieve points on the ppf. To produce more of one item, we must give up some of the other item. If we are inside the ppf, we can increase production of either or both of the items by becoming more efficient. Different points on the ppf reflect different choices made by.

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