Production Possibilities Graph

Meaning of Each Dot

• A, B, C- Attainable and efficient 
• D- Unattainable and inefficient
• E- Unattainable

What Cause PPC/PPG to shift?

• Technological changes
• Δ in resources
• Economic Growth
• Natural Disasters/war/famine
• Δin labor force
• More education: Training (Human Capital) 

3 Movement of PPC 

• This occurs when resources are unemployed or underemployed
• Inside the Curve
• Along the Curve
• Shifts of PPC

Factor of Productions

Factors of Production - Resources required to produce goods and services

• Land
• Labor
• Capital
• Entrepreneurship
• Land-  Resources required to make the product
• Labor- People required to make the product
• Capital-
• Human- skills, abilities, knowledge
• Physical- Tools, buildings, machine
• Entrepreneurship- Innovative, risk takers

Trade Offs- Alternative that we give up whenever we choose one course of action over another

Opportunity Cost- The next best alternative

Production Possibilities Curve (PPC)- to show alternative way to use society economy

• PPC- Production Possibilities Frontier (PPF)
• PPC- Production Possibilities Graph (PPG)

4 Assumptions of Production Possibilities Graph (PPG)

• 2 Goods
• Fixed Resources
• Fixed Technology
• Full Employment of Resources

Allocate Efficiency- Product being produced are the ones most desired by society

Productive Efficiency- Product being produced in the cheapest way possible

Macroeconomics Pt. 2

Goods

• Tangible Commodities 
• Capital Good
• Items used in creation of other good
• Ex: Cotton, Wood, Metal
• Consumer Good
• Goods that are intended for final use by consumer 
• Ex: Xbox, Computer, Television 

Services

• Work perform for someone
• Ex: Retail, Construction Worker, Farmer

Scarcity

• Most fundamental economic problem society face
• How to satisfy a limited want with limited resources

Shortage

• Quantity demanded is greater than Quantity supply

Macroeconomics Pt.1

Positive Economics

• Attempt to describe the world as it is
• Collects & Presents facts

Normative Economics

• Attempts to describe how the world should be
• Opinion rather than facts

Needs

• Basic Requirement for Survival:
• Food
• H20 
• Shelter
• Clothing

Wants

• Desire of Citizens:
• Power
• Romance
• Money
• New Car

Introduction to Macroeconomics

Macroeconomics

• Study of economy as a whole
• International Trade
• Supply & Demand
• Minimum Wage

Microeconomics

• Study of individual or specific units of economy
• Market Structures
• Business Organizations