Please enable JavaScript.
Coggle requires JavaScript to display documents.
Econs unit 1 - Coggle Diagram
Econs unit 1
PPC
Scarcity - point lies outside the curve
- shows unattainable combinations of output
Unemployment - point lies within the curve
- occurs when current resources are not being utilised fully and efficiently (not productive efficient)
Choice - any point on the curve
- only one point on the curve is allocative efficient
-
Law of increasing opp cost - graph is concave from origin
- resources are not perfect substitutes
- resources used to produce one gd may not be suitable to produce another gd
- we take away resources from the produc of good to another
Movement within PPC
Due to unemployment
- point lying inside the curve can move onto the curve (all resources are fully employed to achieve highest standard of living)
Shifts in PPC
caused by changes in qty of resources, quality of resources and/or state of tech
- Outward shift
- caused by an increase in qty of &/or quality of resources or an improvement in state of tech
- potential economic growth achieved
- Inward shift
- reduction in the amount of available resources
- max amt of goods and services that can be produced from the given resources has decreased
- negative potential economic growth
- outlines all possible combinations of 2 goods assuming that a fixed qty of resources are fully and efficiently used with a given state of tech
-
Scarcity, choices & opp cost
Scarcity is the CEP.
Have unlimited wants but limited resources
leads to choics and sacrifices being made
Opp cost - value of next best alternative forgone when a choice is made
smth like the sacrifice that was made when u make a choice and have to let go of something else
Choices raise these questions:
- What and how much to produce
- How to produce
- For whom to produce
-
-
-
-
Standard of living
- refers to the qty of goods and services enjoyed by an individual in an economy and their quality of life