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Chapter 2

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Department
Economics
Course
Economics 1021A/B
Professor
Prof
Semester
Fall

Description
CHAPTER 2Everyday 17 million produce goods and services valued at 5 billion Production Possibilities and Opportunity CostQuantities of goods and services that we can produce are limited by available resources and technology If we want to increase production of 1 good must decrease production of anothertradeoffProduction Possibilities Frontier the boundary between those combinations of goods and services that can be produced and those that cannot shows maximum combinations of outputs that can be produced with given resources Tradeoff Along the PPF every choice along the PPF involves a tradeoffOpportunity Cost highest valued alternative forgone The opportunity cost of producing more cola is the cola we must forgo Opportunity cost is a ratio give upget Opportunity cost of pizza increases as the quantity increases Outward bowed shape of PPFincreased opportunity cost
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