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Production Possibility Frontiers PPFs, Opportunity Cost, Efficiency -…
Production Possibility Frontiers PPFs
Micro
Not beyond the curve
Shows various combination of how much X & Y a firm can produce
A ppf curve indicates the law of increasing opportunity cost
Macro
A ppf curve indicates the law of increasing opportunity cost
Opportunity Cost
Any point within the curve means the production is inneficient
Unimployement
.
Straight Line = Constant Opportunity Cost
Curved Line = Increasing Opportunity Cost
Any point thats on the curve is productively efficient
Efficiency
Productive
Any point thats on the curve
Productively efficent
Any point that isnt on the curve
Productively inneficient
Any point outside the curve
Unobtainable
Pareto
The idea that nobody can be made better off without making someone else worse off
To produce one thing, we need to give up something else
Certain people will be made worse off
Any point on the curve is parato efficient
Allocative
Whether whats being produced is satisfieing consumer demand
The basic economic problem
We can't always tell