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DateDate: February 7, 2013: February 7, 2013
TopicTopic: Production Possibilities : Production Possibilities CurvesCurves
AimAim: How does a production : How does a production possibilities curve reflect an possibilities curve reflect an
economy?economy?
Do NowDo Now: Handout. : Handout.
HI, IM BILLY. IM LAZY. I WAS BORN WITH MANY TALENTS. I CAN SEW, SING, DANCE, CATCH A FRISBEE WITH MY TEETH BUT I DON’T PURSUE THESE TALENTS BECAUSE OF MY LAZINESS. IM AN INEFFICIENT PERSON…
HOW CAN OUR FRIEND BILLY BECOME AN EFFICIENT INDIVIDUAL?
Efficiency•Efficiency using resources to maximize the
production or output of goods and services.•What would happen if suddenly an economy
was not efficient? Can you give an example?•Underutilization using fewer resources
than an economy is capable of using.
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AN OLD OIL BURNER IS GOING TO USE MORE OIL TO HEAT YOUR HOME COSTING YOU MORE MONEY! INEFFICIENT!
Production Possibilities Curves, Frontiers, and Graphs
• Production Possibilities Curve (or frontier) An economist decides which goods or services to examine – two (2).
• Alternative ways to use a economy’s resources.
• Trade-offs between any two items produced.
LET’S DO ONE OF THESE ON OUR OWN
Law of Increasing Costs•As production switches from one item to
another more and more resources are necessary to increase production of the second item….
HOMEWORK