ECN 104 Lecture Notes - Lecture 2: Opportunity Cost

• School: Ryerson University
• Department: Economics
• Course: ECN 104
• Professor: German Pupato

Document Summary

Economists depend on models to predict economy. A model is a simplified representation of a real situation that is used to better understand real-life situations. By: creating a real but simple economy, example: cigarettes in world war ii prison camps, simulating an economy on a computer, example: ta models, money models. Resources are scarce, so economies face trade-offs (principle #1 in ch. 1) To think about these trade-offs economists use a simple model known as the. Simplification: imagine canada is a one-company economy (bombardier), which can produce two goods (trains and jets) We can then analyze: feasibility (possible), efficiency (in production), opportunity cost, economic growth. The production possibility frontier and increasing opportunity cost. Economic growth results in an outward shift of the ppf bcause productions possibilities are expanded.