Unit I (PPC/PPG)

Factors of Production: resources required to produce goods and services

• land 
• labor 
• capital(human/physical)
• Entrepreneurship 

Trade Off: Alternative that we give up when we choose one course of action over another 

                                                

Opportunity cost: next best alternative

• You give up something for a cost

Production Possibilities Curve(PPC): show alternative ways to use economies resources 

• Frontier(PPF)
• Graph (PPG)

4 assumptions of a PPG:

1. 2 goods
2. fixed resources( stay fixed)
3. fixed technology ( information and knowledge stays the same)
4. full employment of resources

Efficiency: using resources in such a was as to maximize the production of goods and services

Allocative Efficiency: products being produced are the ones that must be defined by society

Productive Efficiency: products being produced in least costly way

• Any point on the PPC curve 

Underutilization:using fewer resources than in economy is capable of using

3 Types of movement that occur within the PPC

• Inside the PPC: resources are unemplyed or underemployed
• Along the PPC: can shift along the curve
• Outside the PPC: unattainable