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OBJECTIVES: Chapter 1:3
o Students will learn to explain how
production possibilities curves
show efficiency, growth, and cost.
o Students will explain why a
country’s production possibilities
depend on its resources and
technology.
Luk_14:28 For which of you,
intending to build a tower, sitteth
not down first, and counteth the
cost, whether he have sufficient to
finish it?
Chapter 1:3
• A production possibility curve is a graph that shows alternative ways to use an economy’s productive resources.
• Production Possibilities Frontier is a line on a production possibilities curve that shows the maximum possible output an economy can produce.
Efficiency, Growth, and Cost:
• Efficiency is the use of
resources in such a way
as to maximize the output
of goods and services.
• Under utilization: or the
use of fewer resources
than the economy is
capable of using.
Efficiency, Growth, and Cost:
• GROWTH: When an
economy grows,
economists say that the
production possibilities
curve has “Shifted to the
right.”
Efficiency, Growth, and Cost: • Costs: Economists explain
these increasingly expensive trade offs, through the law of increasing costs, this principle states that as production shifts for making one item to another, more and more resources are necessary to increase production of the second item.
• Therefore the opportunity cost increases.
Efficiency, Growth, and Cost: • Technology and
Education: Both human and physical capital reflect a vital ingredient of economic growth technology.
• Technology is the process used to create goods and services.
• Technology is one of the factors that can increase a nations’ efficiency.
Discussion Activity
• Gather into groups of four and discuss and
explain what technologies need to be
updated or upgraded and explain the
reasons why you chose what needs to be
updated.