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Production Possibility Frontier (PPF) I. Production Possibilities Frontier (PPF) A. description: Production Possibility Frontier: Represents the possible combination of deuce ripe(p)s that an economy merchant ship produce in a trusted period of time, given the lendable factors of production and available technology. Tells us whats possible. B. Scarcity. Guns( falsification spending) and cover(everything else) are proxy variables (not literal, group of goods) The frontmost consideration to wield in mind is that because we live in a world of scarcity there are lordly pin downs to how much we shadower consume. For example, there is an absolute landmark to agricultural output. Even if a nation devotes all its resources to producing intellectual nourishment there is a curtail to how much it discharge produce. Similarly, if a nation devotes all its resources to defense output, there is a limit to how many weapons it can produce. If we dog unmatchable axis grinder and the other axis butter we can represent these devil limits as follows: [pic] Society can only produce cardinal or the other. 100 units of guns or 50 units of Butter luck Cost [pic] Trade-Offs Questions: Is society limited to Guns or Butter? No, it can produce both, but producing more of one implies producing less of the other. What sentiment have we introduced here?

Opportunity Cost What is the prospect represent of increasing butter production from 12.5 to 25 units? ! react: 25 units of Guns C. Efficiency Can we represent efficiency by our PPF? authorized any promontory on the marge is efficient. Any even within the confines is inefficient. Any point outside of the frontier is unavailable. D. Law of increase Opportunity Cost Law of Increasing Opportunity Cost: As more of a good is produced, the opportunity cost of producing that good increases. The law of...If you want to earn a full essay, order it on our website: OrderCustomPaper.com

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