ECON 1200 1st Edition Lecture 3Current LectureCHAPTER 2: TRADEOFFS, COMPARATIVE ADVANTAGE, AND MARKETS (CONT)- A bowed out PPF curve illustrates increasing, rather than constant, production. (This is more realistic)- Marginal Opportunity Cost- As the economy increases its production of 1 good in 1-unit increments, it must decrease its production of the other good by larger and larger amounts (pg. 42)- Some places are better suited to produce one good over another. This is why trade occurs- PPF- illustrates the relationship between the production quantities of 2 goods on the X and Y axes. (Resources and technology are constant and not shown on the graph)o When a variable on an axis changes we move along the curveThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. IncreasingConstantEXAMPLES OF SHIFTS:TI.ComputersScarcity in labor to make corn shifts the point below the PPF curve. (Now inefficient)ComputersCornCornWhen consumer preferences change such that they will want more computers and lesscorn, some workers quit farming to produce computers. (Frontier curve will not shift in orout. Instead, the point on the curve shifts)When resources used to make goods are destroyed, the entire curve shifts downward.This is because scarcity increases.ComputersCornAn increase in the technology used to make corn shifts the entire curve outward because the firm can produce at a more efficient level than
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