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    Economic Choices and Decision-Making Economic Choices and Decision-Making

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    Lawrence Paz
    The document discusses basic economic concepts including scarcity, choice, and opportunity cost. It explains the production possibilities curve and how it represents the maximum combinations of goods an economy can produce with full employment of resources. The production possibilities curve shifts due to changes in available resources, showing attainable, inefficient, and unattainable levels of production.

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    Economic Choices and Decision-Making Economic Choices and Decision-Making

    Uploaded by

    Lawrence Paz
    52 views20 pages
    The document discusses basic economic concepts including scarcity, choice, and opportunity cost. It explains the production possibilities curve and how it represents the maximum combinations of goods an economy can produce with full employment of resources. The production possibilities curve shifts due to changes in available resources, showing attainable, inefficient, and unattainable levels of production.

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    02 Economic Choices

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    The document discusses basic economic concepts including scarcity, choice, and opportunity cost. It explains the production possibilities curve and how it represents the maximum combinations of goods an economy can produce with full employment of resources. The production possibilities curve shifts due to changes in available resources, showing attainable, inefficient, and unattainable levels of production.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    52 views20 pages

    Economic Choices and Decision-Making Economic Choices and Decision-Making

    Uploaded by

    Lawrence Paz
    The document discusses basic economic concepts including scarcity, choice, and opportunity cost. It explains the production possibilities curve and how it represents the maximum combinations of goods an economy can produce with full employment of resources. The production possibilities curve shifts due to changes in available resources, showing attainable, inefficient, and unattainable levels of production.

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    You are on page 1of 20

    Economic Choices and

    Decision-Making

    Prepared by :
    Josefine M. de Leon
    Professor
    University of the Cordilleras
    College of Business Administration
    Economics At A Glance

    unlimited limited
    wants and resources
    needs

    SCARCITY

    CHOICES

    What to How much to How to For whom to


    produce? produce? produce? produce?
    Basic Economic Questions
    BASIC
    ECONOMIC CONCEPT FACTORS
    QUESTIONS
    What to determines what KIND of availability of
    produce? goods and services are to resources; physical
    be produced environment; wants
    and needs of the
    consumers; tastes and
    preferences; customs
    and traditions of the
    people
    Basic Economic Questions
    BASIC
    ECONOMIC CONCEPT FACTORS
    QUESTIONS
    How much to It refers to the QUANTITY Willingness of the
    produce? of each good consumers to buy the
    goods and services
    Basic Economic Questions
    BASIC
    ECONOMIC CONCEPT FACTORS
    QUESTIONS
    How to It pertains to :
    produce?
    the TECHNIQUE of
    production (labor-
    intensive technology or
    capital-intensive
    technology)

    the manner of combining


    resources to come up
    with the desired output
    Basic Eco0nomic Questions
    BASIC
    ECONOMIC CONCEPT FACTORS
    QUESTIONS
    For whom to It refers : purchasing power of
    produce? the consumers
    to the MARKET to which
    the producers will sell demand for the
    their products product

    how products are to be


    DISTRIBUTED (direct or
    indirect distribution)
    Basic Economic Questions
    BASIC
    ECONOMIC CONCEPT FACTORS
    QUESTIONS
    At what price to it determines how much Consumers’ willingness
    produce consumers are willing to to pay for the product
    pay for the product
    Opportunity Cost

    It is the value of the best alternative forgone


    when an item or activity is chosen.
    Production Possibilities Curve

    It is a curve representing alternatives of


    goods and / or services an economy can
    produce when all productive resources are
    fully employed.
    Production Possibilities Curve
    8
    the curve shows
    the maximum
    Units of food (millions)

    7
    combinations of
    6
    output when all
    5 Units of food Units of clothing resources are fully
    (millions) (millions) employed
    4
    8m 0.0
    7m 2.2m
    3 6m 4.0m
    5m 5.0m
    2 4m 5.6m
    3m 6.0m
    1 2m 6.4m
    1m 6.7m
    0
    0 7.0m
    0 1 2 3 4 5 6 7 8

    Units of clothing (millions)


    Production Possibilities Curve
    8 A
    Units of food (millions)

    Units of food Units of clothing


    5 (millions) (millions)

    4 A 8m 0.0
    7m 2.2m
    3 6m 4.0m
    5m 5.0m
    2 4m 5.6m
    3m 6.0m
    1 2m 6.4m
    1m 6.7m
    0 7.0m
    0
    0 1 2 3 4 5 6 7 8

    Units of clothing (millions)


    Production Possibilities Curve
    8
    B
    Units of food (millions)

    Units of food Units of clothing


    5 (millions) (millions)

    4 8m 0.0
    B 7m 2.2m
    3 6m 4.0m
    5m 5.0m
    2 4m 5.6m
    3m 6.0m
    1
    2m 6.4m
    1m 6.7m
    0 7.0m
    0
    0 1 2 3 4 5 6 7 8

    Units of clothing (millions)


    8 Production Possibilities Curve
    7
    Units of food (millions)

    C
    6

    5 Units of food Units of clothing


    (millions) (millions)

    4 8m 0.0
    7m 2.2m
    3 C 6m 4.0m
    5m 5.0m
    4m 5.6m
    2 3m 6.0m
    2m 6.4m
    1 1m 6.7m
    0 7.0m

    0
    0 1 2 3 4 5 6 7 8
    Units of clothing (millions)
    8 Production within the Curve
    7
    Units of food (millions)

    x
    6
    1 y
    5
    1
    4 2

    3
    z
    1

    0
    0 1 2 3 4 5 6 7 8
    Units of clothing (millions)
    8 Production inside the Curve
    7
    Units of food (millions)

    X
    6

    4 Y

    3 Attainable but
    inefficient
    2

    0
    0 1 2 3 4 5 6 7 8
    Units of clothing (millions)
    8 Production outside the Curve
    7 Z
    Units of food (millions)

    X unattainable
    6 with the current
    available
    5
    resources
    4

    0
    0 1 2 3 4 5 6 7 8
    Units of clothing (millions)
    Food Shift in the PPC

    O
    Clothing
    Food Upward Movement of the PPC

    O
    Clothing
    Shift in the PPC

    y
    F1
    x
    Food

    O C C1
    Clothing
    Effects of the Upward Movement of the
    PPC

    modern more
    technology resources better inputs

    PPC to move
    upward

    more products increased economic


    will be productivity growth
    available

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