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Chapter 2

ECON 1B03 Chapter Notes - Chapter 2: Opportunity Cost

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Hannah Holmes

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Richard Damra Monday, January 14, 2013
Econ 1B03 Chapter 2 Production Possibilities
Production possibilities Frontier
PPF: A graph the shows the combinations of output than an economy can possibly produce
given the available resources and the production technology
It shows the best an economy can do if it uses all its resources efficiently, given the current
Example: Macland
Consider the economy of Macland. It produces only 2 goods: computers and cars
Macland’s technology is given (it is what it is)
Its resources are fixed
The following table shows combinations of computer and cars Macland can produce if it uses all
its resources, given the current technology
PPF for Macland
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