CV 2014 July 16

PPF production-possibilities frontier maximum amounts of production that can be obtained by an economy given its technological knowledge and quantity of inputs or resources available Goods Are Limited societies cannot have everything they want limited not just by resources but also by technology available to them societies must choose between goods, and one of the broadest choices that virtually every country is forced to make is between producing guns vs butter opportunity cost movement along PPF illustrates this concept opportunity costs of moving from D to C is the butter given up to produce extra guns in a world of scarcity, choosing one thing means giving up something else opportunity cost of a decision is the value of the good or service forgone because resources are scarce, must always consider how to spend limited resources or time important point by sacrificing current consumption and producing more capital goods a nation's economy can grow more rapidly