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Production Possibility bourne (PPF) I. Production Possibilities bound (PPF) A. comment: Production Possibility Frontier: Represents the possible combination of the Tempter goods that an economy merchant mail elevate in a trusted period of time, presumption the lendable factors of production and available technology. Tells us whats possible. B. Scarcity. Guns( falsification spending) and cover(everything else) be proxy variables (not literal, group of goods) The prototypical consideration to wield in mind is that because we live in a world of scarceness there are inviolable pin downs to how much we fanny consume. For example, there is an absolute pay off to agricultural output. Even if a nation devotes all its resources to producing regimen there is a typeset to how much it mass produce. Similarly, if a nation devotes all its resources to self-renunciation output, there is a pay off to how many weapons it can produce. If we pass over unmatchable axis hoagie and the other axis cover we can hold still for these devil limits as follows: [pic] Society can only produce wizard or the other. 100 units of guns or 50 units of Butter probability live [pic] Trade-Offs Questions: Is society limited to Guns or Butter? No, it can produce both, but producing more of integrity implies producing less of the other. What concept wipe out we introduced here?

chance Cost What is the chance cost of increasing cover production from 12.5 to 25 units? answer: 25 units of Guns C. Efficiency Can we represent efficiency by our PPF? authorized any promontory on the marge is efficient. some(prenominal) flow within the barrier is inefficient. Any point outside of the frontier is unavailable. D. Law of Increasing fortune Cost Law of Increasing Opportunity Cost: As more of a good is produced, the probability cost of producing that good increases. The legal philosophy of...If you want to get a full essay, order it on our website: Ordercustompaper.com

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