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Exercises

Exercises. Circular Flow Diagram Production Possibilities Frontier. Directions. In any slides that contain ?’s or blanks. replace the ?’s with correct labels, fill in the blanks. Check your answers in the slides that follow. Learn from your errors, if any. _____ Diagram. A ?. ?. ?. ?.

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Exercises

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  1. Economics

  2. Exercises • Circular Flow Diagram • Production Possibilities Frontier Economics

  3. Directions • In any slides that contain ?’s or blanks. • replace the ?’s with correct labels, • fill in the blanks. • Check your answers in the slides that follow. Learn from your errors, if any. Economics

  4. _____ Diagram A ? ? ? ? ? I ? II ? ? ? B ? ? ? Economics

  5. Circular Flow Diagram Markets forG&S $revenue $spending G&S sold G&S bought Firms Households Resources used Resources supplied $costs $income Markets forResources Economics

  6. The _____ _____ _____ ? A 40 B Good v C ? O Economics Good x 12

  7. The production possibilities frontier (PPF) Qv A 40 B Good v Connecting the combinations traces out the production possibilities frontier (PPF). C Qx O Economics Good x 12

  8. ____, _____, & _____ Qv PPF A U 40 ? B Good v ? E ? I C Qx O Economics Good x 12

  9. Inefficiency, efficiency, and scarcity Qv PPF A U 40 All combinations outside the PPF are unattainable,due to scarcity. B Good v All combinations inside the PPF are inefficient. E All combinations on the PPF are efficient. I C O Qx Economics Good x 12

  10. _____, _____, & _____ _____ Qv A 40 ? B ? ? C Economics O Qx ? 12

  11. Choices, tradeoffs, & opportunity cost 2. But the economy cannot produce two combinations at the same time (tradeoffs). 1. The economy can choose to produce any combination inside or on the PPF (choices). Qz A 40 3. Suppose the economy is originally at A,… Loss B 4. …then it moves to B. Gain 5. Then it moves from B to C. 6. The economy incurs opportunity costs. (OC = loss/gain) Loss C Economics O Qx Gain 12

  12. _____ _____ Qv 40 ? B ? Economics O 12 Qv

  13. Economic growth Qv The economy grows when the PPF shifts outward. 40 PPF2 B PPF1 Economics O 12 Qx

  14. _____ _____ Qv 40 ? ? 12 O Qx Economics

  15. Technological advances Qv Technological advances occur when the PPF rotates outward. 40 PPF2 PPF1 12 O Qx Economics

  16. _____ _____ _____ Qv A T 40 B PPF C O 12 Qx Economics

  17. Gains from trade Gains from trade occur when the economy can consume a combination outside the PPF. Qz A T 40 B PPF C O 12 Qx Economics

  18. See You! Take Care! Economics

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