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LESSON 2.2 Production Possibilities Frontier

Objectives. LESSON 2.2 Production Possibilities Frontier. Describe the production possibilities frontier and explain its shape. Explain what causes the production possibilities frontier to shift. Key Terms. LESSON 2.2 Production Possibilities Frontier.

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LESSON 2.2 Production Possibilities Frontier

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  1. Objectives LESSON 2.2Production Possibilities Frontier Describe the production possibilities frontier and explain its shape. Explain what causes the production possibilities frontier to shift. CONTEMPORARY ECONOMICS: LESSON 2.2

  2. Key Terms LESSON 2.2Production Possibilities Frontier production possibilities frontier (PPF) efficiency law of increasing opportunity cost economic growth CONTEMPORARY ECONOMICS: LESSON 2.2

  3. Efficiency and Production Possibilities Frontier • Simplifying assumptions • PPF model • Inefficient and unattainable production • Shape of the PPF CONTEMPORARY ECONOMICS: LESSON 2.2

  4. Production Possibilities Frontier • A through Fare attainable • I represents inefficient use of resources • U represents unattainable combinations CONTEMPORARY ECONOMICS: LESSON 2.2

  5. Shifts in the PPF • Changes in resource availability • Increases in stock of capital goods • Technological change • Lessons from the PPF CONTEMPORARY ECONOMICS: LESSON 2.2

  6. Increase in available resources Decrease in available resources Shifts in the PPF CONTEMPORARY ECONOMICS: LESSON 2.2

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