ECON 1 Lecture 7: Econ 1 Lecture 7 Notes
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Department
Economics
Course
ECON 1
Professor
Martin Santamaria
Semester
Spring

Description
Econ 1 Lecture 7 Notes Production Possibilities Curve: o A graph that describes the maximum amount of one good that can be produced for every possible level of production of the other good. Example: 1 lb of fish per hour, 3 lb of coconuts per hour, 8hrs per day o Opportunity cost: abs(Slope) = Opportunity cost of the good in horizontal axis o 1abs(Slope)=Opportunity cost of the good on vertical axis o Opportunity cost of 1 lb of fish is 3 lb of coconuts o Opportunity cost of 1 lb of coconuts is 13 lb of fish Production Possibilities for 2 person: o Low Hanging fruit Principle: in expanding production of any good, first employ those resources with lowest opportunity cost For a large economy: wed get a curved PPC
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