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Department
Economics
Course
ECONOM 1051
Professor
George
Semester
Fall

Description
Econ 1051­ Chapter 2 I. Production Possibilities Frontier­ a curve showing the maximum attainable  combinations of products that may be produced with available resources and  current technology A. points 1. points outside the curve are unattainable (we don’t have the resources) 2. points inside the curve are attainable (but inefficient as we didn’t  maximize potential and utilize all resources) 3. points on the curve are what you can do B. advantages­ illustrates perfectly the opportunity cost (how much of one  good can’t be produced when one is being produced). Negative slope of  PPF represents trade­off. II. Trade­ act of buying and selling; allows people to become better off by  increasing production and consumption (to move beyond the PPF) A. absolute advantage­ ability of an entity to produce more of a good/service  than competitors using the same amount of resources B. comparative advantage­ ability of an entity to produce a good at a lower  opportunity cost than competitors. BASIS FOR TRADE.  Specializing in  good you have this a
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