 Economic problem  Limited Income  Unlimited Wants Chapter 1, LO51©2013 McGraw-Hill Ryerson Ltd.

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Presentation transcript:

 Economic problem  Limited Income  Unlimited Wants Chapter 1, LO51©2013 McGraw-Hill Ryerson Ltd.

Chapter 1, LO52 [T1] Ed: Place Brazil ahead of Mexico[T1] [T2] Ed: Place Pakistan ahead of Nigeria[T2] CountryPer Capita Income, 2010 (U.S. dollars, based on exchange rates) Switzerland70,350 United States47,140 Canada41,950 France42,390 Japan42,150 South Korea19,890 Brazil9,390 Mexico9,330 China7,560 Pakistan2,780 Nigeria2,160 Rwanda1,180 Liberia 330

LO4 1-3  A budget line  Attainable and unattainable options  Tradeoffs and opportunity costs  Make the best choice possible  Change in income ©2013 McGraw-Hill Ryerson Ltd.3 Chapter 1, LO5

LO4 1-4  Scarce Resources  Land  Capital  Human Resources  Labour  Entrepreneurial Ability ▪ takes initiative ▪ makes policy decisions ▪ innovates ▪ bears risk ©2013 McGraw-Hill Ryerson Ltd.4 Chapter 1, LO5

LO5 Type of Product Pizzas (in hundred thousands) Industrial Robots (in thousands) Production Alternatives ABCDE Plot the Points to Create the Graph… 1-5 ©2013 McGraw-Hill Ryerson Ltd.5 Chapter 1, LO6

LO5 The law of increasing opportunity costs makes the PPC concave. 1-6 Pizzas Industrial Robots Attainable Unattainable A B C D E U ©2013 McGraw-Hill Ryerson Ltd.6Chapter 1, LO6

LO5 a b c d e MB = MC MC MB Quantity of Pizza Marginal Benefit & Marginal Cost 1-7 ©2013 McGraw-Hill Ryerson Ltd.7 Chapter 1, LO6

LO5 U, represents unemployment or a failure to achieve productive efficiency. The arrows indicate that, by realizing full employment and productive efficiency, the economy could operate on the curve. 1-8 Pizzas Industrial Robots A B C D E U ©2013 McGraw-Hill Ryerson Ltd.8Chapter 1, LO7