[ECON 1] - Final Exam Guide - Everything you need to know! (23 pages long)
Document Summary
Opportunity cost: the value of the next best alternative forgone when an action is taken: chose option a but option b is next best option and your opportunity cost. Production possibility frontier (ppf): table, graph, or equation that shows the different combinations of outputs that can be produced from a given set of resources (inputs) and technology: in our model: 2 countries (a and b: givens. Country a: 800 labor hours available (la = 800 hours) Country b: 800 labor hours available (lb = 800 hours) For country a: soybeans take 2 hours to produce one unit and textiles take 1 hour to produce one unit. For country b: soybeans take 8 hours to produce one unit and textiles take 2 hours to produce one unit. Derivation of each country"s ppf: trial-and-error approach. Thursday, march 31, 2016: 100 hours of output if labor hours only for soybeans and 400 hours of output if labor hours only for textiles, [footnote] math.
