1 / 9

LO4

Scarce Resources. Natural, human, manufactured Land (all natural resources) Labor (physical and mental actions of people) Capital (manufactured aids) Entrepreneurial Ability (takes initiative; innovates). 1- 1. LO4. Production Possibilities Model.

yosef
Download Presentation

LO4

An Image/Link below is provided (as is) to download presentation 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. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Scarce Resources • Natural, human, manufactured • Land (all natural resources) • Labor (physical and mental actions of people) • Capital (manufactured aids) • Entrepreneurial Ability (takes initiative; innovates) 1-1 LO4

  2. Production Possibilities Model • Society uses scarce resources to produce goods and services. • Illustrates production choices • Assumptions: • Full employment • Fixed resources (# of factors of production-land, labor, capital, is fixed) • Fixed technology • Two goods (hypothetical; economy is producing only two goods, one consumer, one capital. 1-2 LO5

  3. Production Possibilities Table & Curve • A Production Possibilities Table lists the different combos of 2 products that can be produced by society at a given time with limited resources.

  4. Production Possibilities Table Production Alternatives A B C D E Type of Product Pizzas (in hundred thousands) 0 1 2 3 4 Industrial Robots (in thousands) 10 9 7 4 0 Talk to me about these numbers… Plot the Points to Create a Graph… 1-4 LO5

  5. Production Possibilities Curve • More pizzas means fewer robots. • Go from A to B • Now go from B to C • The law of • increasing • opportunity costs: as production of one good increases, the OC of producing an additional unit rises! • Makes • the PPC concave. 14 13 12 11 10 9 8 7 6 5 4 3 2 1 A B Unattainable C Industrial Robots (thousands) D U Attainable E 0 1 2 3 4 5 6 7 8 9 Now look at p.12 Pizzas (hundred thousands) 1-5 LO5

More Related