6 January 2016

Factor of production: There resource required to produce goods and services.

Trade-Offs: Alternative that will give up when will choose one cause of action over another.

Opportunity Cost: Its the next best alternative (second or next choice).

Production Possibility Graph: It shows alternative ways to use an economy resources.

Four Assumption of a PPG 1.) Two goods (x, y)
                                           2.)Fixed Resources(land,labor,capital,capital & entrepreneur
                                           3.)Fixed Technology.
                                           4.)Full Employment of resources.

Efficiency: Using resource in such away to maximize the production of goods and services.

Allocative: The production that are being produce are the one most desire by society.

Product Efficiency: Product are being produce in the least costly way.

Under Utilization: Use few resources that an economy is capable of using.

• Point X: Is inside the curve.
• Attainable, but Inefficient.
• Underutilization
• Point A, B, & C: On the curve.
• Attainable and efficient.
• Point Y: Outside of the curve.
• Unattainable

Three type of movement that occur within (PPG)

1. Inside the PPC
2. Along the PPC
3. Shifts of the PPC