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The Economic Problem: Scarcity and Choice
The Economic Problem: Scarcity and Choice
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
What is Production?
Human resources
Natural resources
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Three Basic Questions
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Three Basic Questions
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Specialization, Exchange and
Comparative Advantage
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Specialization, Exchange and
Comparative Advantage
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Absolute Versus Comparative Advantage
Conclusion:
Country A will specialize in producing food, and
country B will specialize in the production of clothing.
Specialization also works to develop skills and
raise productivity.
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Weighing Present and Expected Future
Costs and Benefits
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Capital Goods and Consumer Goods
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
The Production Possibility Frontier
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
The Production Possibility Frontier
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
The Production Possibility Frontier
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
The Production Possibility Frontier
Point F is desirable
because it yields more of
both goods, but it is not
attainable given the
amount of resources
available in the economy.
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
The Production Possibility Frontier
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
The Production Possibility Frontier
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
The Law of Increasing Opportunity Cost
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Economic Growth
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Economic Growth
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
The Economic Problem
Laissez-faire economies
Mixed systems
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
The Economic Problem
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Laissez-Faire Economies:
The Free Market
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Laissez-Faire Economies:
The Free Market
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair
Mixed Systems, Markets, and
Governments
Redistribute income
2002 Prentice Hall Business Publishing Principles of Economics, 6/e Karl Case, Ray Fair