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Book 1 - Coggle Diagram
Book 1
The Production Possibility Curve
Represents opportunity cost (OC)
At one point economy produces all of one good at one point produces all of another
Assumptions underlying PPC
2 Good produced
Tech/Resources Constant
Full Productive Capacity
Shape of Mindmap
Convex curve - OC increases as more is invested
Not all resources are 100% efficiently transferred
Production possibilities and Economic Growth
More technology
Biased tech: non-uniform shift
May be uniform shift
More resources
Uniform outward shift
Production possibilities and EG
Capital and Consumer goods on axis
Capital>Consumer goods
short term effects
long term effects
Capital<Consumer goods
short term effects
long-term effects
Economic problem
Wants and Needs are unlimited
Wants - material desires of an individual or community
Collective wants (wants of the collective)
Individual wants (wants of the individual)
Goods used to satisfy wants
Consumer goods
Non-discretionary goods
Discretionary goods
Resources are Scarce and Limited
Price is a measure of Scarcity; some resources are not scarce at all (thus are free)
Big Four
How to produce
How much to produce
What to produce
Distribution of production
Types of Economies
Market economy
Private ownership, profit motive
Little to none government control
Mixed-Market Economies
Mixed market economies are economies that mix command economies and market economies
Command/Centrally Planned Economies
State-control, no market forces, black market
E.g. USSR, Cuba, North Korea
Public ownership of means of production
State-owned enterprises
Circular Flow of Income
Business Cycle