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Production Possibility Frontier

Published on Nov 18, 2015

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MORE DECKS TO EXPLORE

PRESENTATION OUTLINE

1.

Production Possibility Frontier

FPP and opportunity cost
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2.

Production Possibility

There is SCARCITY of resources, so you have TRADE OFF
3.

PP Frontier:

  • the curve that defines the combination of products that CAN be produced
4.

What would you rather be doing?

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5.

You have two options:
1. sleep
2. do hwk

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6.

- How many hours can you sleep?
- How many hours can you do homework?
- How many classes do you have?

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7.

Let's trace your FPP

Is it a curve?
8.

3 possibilities:

  • Achievable but inneficient
  • Achievable but efficient
  • Unreachable
9.

Where is which?

10.

Let's know how to do a PPF

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11.

Imagine a country can only produce 2 types of goods: corn vs cars

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12.

If they produce only cars, in a day they build 32 cars

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13.

If they produce only corn, in a day they can harvest 80 kg

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14.

What is their FPP?

Are we missing information for the curve?
15.

This is their weekly production:

Photo by Cory M. Grenier
16.

Now, what is their FPP?

17.

Let's calculate the Opportunity Cost

How do you think we can do it?
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18.

Definition of OC?

So how can we calculate it?

19.

Homework

In BB you will find an exercise. You have to submit it before next class.
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