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II The Production Possibilities Frontier

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CHAPTER 1 ECONOMICS Economic Notes Chap.1 What is Economics? Section 1-1 – PowerPoint PPT presentation

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Title: II The Production Possibilities Frontier


1
II The Production Possibilities FrontierThe
line that shows the different levels of
production at each stage or after each decision
  • A. EfficiencyProduction that maintains or
    follows the line drawn as the Production
    Possibilities Frontier.
  • B. Underutilizationany production that falls
    under or within the line identified as the
    Production Possibilities Frontier.
  • C. GrowthDue to a change in labor or resources,
    production exceeds the Production Possibilities
    Frontier. This is a temporary situation as the
    Production Possibilities Frontier is redrawn.

2
III. DEFINING COST
  • TO ECONOMISTS IT ALSO MEANS WHAT HAS TO BE GIVEN
    UP ALONG WITH CHANGING FINANCIAL COSTS.
  • . The Law of Increasing CostsWhen there is a
    change or increase in production of one product
    from another there will be an increase in the
    opportunity costs as production shifts. This
    increase may be temporary and explains why the
    Production Possibilities Frontier will curve.

3
IV. Basic Economic Ideals
  • T.I.N.S.T.A.A.F.L.--(THERE IS NO SUCH THING AS A
    FREE LUNCH)
  • States that all things have value and that
    value has to be assumed by someone.
  • When you consume food you are using value.

4
Basic Economic Ideals
  • CYCLE OF A DOLLAR
  • Belief that is an active and healthy
    economy--every dollar spent theoretically will
    cycle thru the economy and return to you

5
Basic Economic Ideals
  • RULE OF 72
  • An investment rule to explain compound interest
  • Take the percent of return on your investment
    (2) and divide that into the number 72. (36)
  • That will tell you the number of years before a
    one time investment will double.
  • http//www.youtube.com/watch?v2P5JlvLuJeA

6
Basic Economic Ideals
  • Need for Economic Diversity
  • In order for the economy to grow, there must be
    people of different economic status.
  • The people are motivated to produce and work in
    order to improve their economic status!
  • if everyone was wealthy concept
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