Chapter 2. Resource Utilization. The Central Fact of Economics: SCARCITY. Scarcity Resources are the things society uses to produce goods and services These resources are scarce (limited) The economic problem
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
As we shift from butter to guns, we have to give up increasing units of butter for each additional unit of guns
Production Possibilities Curve
Hypothetical Production Schedule
Point Units of Butter Units of Guns A 15 0 B 14 1 C 12 2 D 9 3 E 5 4 F 0 5
This is known as the “law of increasing cost.” As the output of one good expands, the opportunity cost of producing additional units of this good increases.
Point W represents output at more than full employment and full production and is currently unattainable
Where we usually are
Every point on the curve represents output at Full Employment and Full Production
Every point inside the curve represents output at less than Full employment and less than Full Production
A move from PPC to PPC to PPC represents economic growth
Country A represents slower economic growth than Country B
Country B represents much faster economic growth than Country A
Country A capital goods is 3.8 units
Country B capital goods is 7.0 units