ECON 2020 Exam 2 Lecture 1
ECON 2020 Exam 2 Lecture 1 Econ 2020
Popular in Principles of Economics: Microeconomics
verified elite notetaker
Popular in Department
This 4 page Class Notes was uploaded by Brianna Notetaker on Friday September 9, 2016. The Class Notes belongs to Econ 2020 at Auburn University taught by William M. Finck in Fall 2016. Since its upload, it has received 13 views.
Reviews for ECON 2020 Exam 2 Lecture 1
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
Date Created: 09/09/16
ECON 2020Exam 2 Lecture 1 9-9-16 Orange – DEFINITIONS Green – FORMULAS Chapter2 ProductionPossibilitiesFrontier ProductionPossibilitiesFrontier(PPF) – curve thatgraphsallpossible combinationsoftwo given goods thataneconomycan produce ASSUMPTIONS: 1. A single economyproducesonlytwo goods 2. The quantityofresourcesfixed 3. Technologyis fixed 4. Resourcesare identical(Appliestoexample#1only) Example#1 (ConstantOpportunityCost) A. Inefficient(unemployment) B. Efficient(full employment) C. Unattainable(givenourassumptions) NOTE: We can measurechanges in unemploymentastheproduction pointmoves A to B: decreasein unemployment B to A: Increasein unemployment NOTE: once fullemploymentisattained,theonlywayto increasethe productionofonegood is totake resources awayfrom the other 2 Example#1: EfficientCombinations Fish 0 1 2 3 4 5 Coconuts 45 36 27 18 9 0 Opp. Cost ofa ---- 9C 9C 9C 9C 9C Fish OPPORTUNITYCOST OFNth UNIT ofX = Quantityof Y at n-1– Quantity of Y at n Law ofincreasingopportunitycosts– as productionofgoodincreases, the opportunitycostofproducinganadditionalunitrises Opportunitycost= numberofunitsofthe othergoodgiven up Fish 0 1 2 3 4 5 Coconuts 45 42 36 27 15 0 Opp. Cost ofa ---- 3C 6C 9C 12C 15C Fish Example#2 (IncreasingOpportunityCost) PointC is nowattainableandefficient! 3 PointD is onlyattainablethrough economicgrowthor trade. EconomicGrowth An outwardshiftofthePPF Causes: 1. An increasein thesupplyofresources 2. A technologicalimprovement 3. A change in regulation Throughgrowth we can producebundleD. Throughtradewe can consumebundleDwithouta PPF shift. 4
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'