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Choices: what results of the need to choose? Why can't we have everything?
limited resources, we have to give up something in order to have something else (opportunity costs).
As individuals we face constraints such as limited income and limited time, as an economy --> limited resources and knowledge
this creates scarcity, therefore we face opportunity cost
the value of the best alternative given up when making a choice.
due to scarcity we face trade-off's
PPF, definition? curve shape?
The PPF is a boundary that shows the alternative combinations of the two goods that can be produced:
- all available resources are fully allocated- resources are used in the most efficient way
always downward sloping as resources are limited
if a point is below PPF curve then it is inefficient (but attainable)if a point is above PPF curve then it is unattainable--> therefore, trade-off's are faced and decisions must be made
Explanation of PPF bowed out shape
As we move from above to the bottom on the PPF, opportunity cost increases
statement is objective in nature, validity can be tested
statement includes value judgement, that can be subjective (should can be a hint)
Lern- und Lehrmittel für Gesundheits- und Sozialberufe
Schweizerischer Verband der Lehrkräfte für Wirtschaft und Recht
Lehrmittel für die KV-Berufsbildung