PPF and Opportunity Cost Maximum possible combinations of food and clothing that can be produced in a given period of time: Create the Production Possibility Frontier for this nation.

Questions…. What is the opportunity cost of moving from producing 4 million units of food to 5 million units of food? What is the opportunity cost of moving from producing 6 million units of clothing to 7 million units of clothing? What is the opportunity cost of switching production from 0 units of food to 2 million units of food?

Market, Central, Mixed & Traditional Economies Economics Breedlove

Market (Capitalism) Definition – An economic system based on a free market, open competition, profit motive and private ownership of the means of production. Laissez-faire “Invisible Hand” Adam Smith Examples? –

Command (Communism) Definition – An economic system characterized by the collective ownership of all property and by the organization of labor for the common advantage of all members. Abolish private property Classless society Bourgeoisie vs. Proletariat Examples –

Traditional Definition -- Any system of economic structure in which the basic questions are answered by customs, rituals, religion or tradition. Usually agriculture-based Generational Examples –

Mixed (Socialism) Definition -- Any system of social organization in which some means of producing and distributing goods is owned collectively or by a centralized government that often plans the economy. Central planning Equality of opportunity Examples –

SCARCITY AND COST In your own words, what is the definition of Economics? Explain the difference between the concept of rarity and scarcity. Give and example of an item that is SCARCE. What are the three basic economic questions? How does a market economy attempt to answer each question? Define Opportunity Cost. What does the Production Possibility Frontier measure?