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ECON 1000 (397)
Chapter 2

Chapter 2 - The Economic Problem.docx

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Department
Economics
Course
ECON 1000
Professor
Shadab Qaiser
Semester
Summer

Description
Chapter 2The Economic ProblemThe production possibilities frontier PPF is a simple economic model thatHelps us understand how society allocates resources and decides what to produce and how muchIllustrates the concepts of scarcity opportunity cost tradeoffs and efficiencyWhen we cannot produce more of any one good without giving up some other good we have achieved production efficiencyAssumptions There are only two goods that the economy producesResources along with technology and capital are fixed The PPF and Marginal CostoThe PPF determines opportunity costThe marginal cost of a good or service is the opportunity cost of producing one more unit of itPreferences and Marginal BenefitPreferences are a description of a persons likes and dislikesTo describe preferences ec
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