ECON 101 - Microeconomics

Chapter 2: The Economic Problem

Learning goals:

  • Define the production possibilities frontier and use it to calculate opportunity cost
  • Distinguish between production possibilities and preferences and describe an efficient allocation of resources
  • Explain how current production choices expand future production possibilities
  • Explain how specialization and trade expand production possibilities
  • Describe the economic institutions that coordinate decision

The production possibilities frontier (PPF) is the boundary between those combinations of goods and services that can be produced and those that cannot.

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