Notes
THE ECONOMIC PROBLEM
Content of the notes (1)
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PRODUCTION POSSIBILITY FRONTIER
Shows the maximum output combination of two goods or services an economy can achieve when all resources are fully and efficiently employed
Reallocating scarce resources from one product to another involved an opportunity cost
If we increase our output of consumer goods (i.e. moving from point A to point B) then fewer resources are available to produce capital goods- law of diminishing returns
FINSIH!!