4. What is a model? A miniature representation of a thing, with the several parts in due proportion; sometimes, a facsimile of the same size. Something intended to serve, or that may serve, as a pattern of something to be made; a material representation or embodiment of an ideal; sometimes, a drawing; a plan; as, the clay model of a sculpture; the inventor's model of a machine. Anything which serves, or may serve, as an example for imitation; as, a government formed on the model of the American constitution; a model of eloquence, virtue, or behavior. That by which a thing is to be measured; standard. Any copy, or resemblance, more or less exact.

5. Production Possibilities Frontiers

6. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza)

7. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources 100 50

8. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources 100 50

9. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs 100 50 a b.

10. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs 100 50 90 25 50 45 a b.

11. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots.

12. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots.

13. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots c Inefficient – unemployed resources.

14. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots c policy Inefficient – unemployed resources.

15. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots c policy Inefficient – unemployed resources d.

16. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots c policy Inefficient – unemployed resources d Unattainable with current resources and technology.

17. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots c policy Inefficient – unemployed resources d Unattainable with current resources and technology.

18. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots c policy Inefficient – unemployed resources d Unattainable with current resources and technology Economic Growth. Economic Growth = SOL Increased quality of human resources (EDUCATION) or technology (INVESTMENT)

19. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots c policy Inefficient – unemployed resources d Unattainable with current resources and technology Economic Growth U.S. Developing nation Economic Growth = SOL Increased quality of human resources (EDUCATION) or technology (INVESTMENT)

20. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots c policy Inefficient – unemployed resources d Unattainable with current resources and technology Economic Growth NOW FUTURE U.S. Developing nation Economic Growth = SOL Increased quality of human resources (EDUCATION) or technology (INVESTMENT)

21. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots c policy Inefficient – unemployed resources d Unattainable with current resources and technology Economic Growth NOW FUTURE U.S. Developing nation Economic Growth = SOL Increased quality of human resources (EDUCATION) or technology (INVESTMENT) Economic Interdependence

22. Production Possibilities Frontier (PPF/PPC) Capital Goods (Robots) Consumer Goods (Pizza) Scarcity – unlimited wants, limited resources Opportunity costs and trade-offs Efficiency – two kinds Productive: producing at the least cost (any pt. on the PPF) Allocative: producing the goods and services most wanted by society (a particular pt. on the PPF) 100 50 90 25 50 45 a b Cost = 40 pizzas Benefit = 20 robots c policy Inefficient – unemployed resources d Unattainable with current resources and technology Economic Growth NOW FUTURE U.S. Developing nation Investment = purchase of capital goods Economic Growth = SOL Increased quality of human resources (EDUCATION) or technology (INVESTMENT) Economic Interdependence

23. Circular Flow Diagram

24. Consumers (Households) Producers (Businesses)

25. Consumers (Households) Producers (Businesses) A market is anything that brings together buyers and sellers

26. Consumers (Households) Producers (Businesses) Product Market (goods/services)

27. Consumers (Households) Producers (Businesses) Product Market (goods/services) Resource Market (land, labor, capital, entrepreneurs)

28. Consumers (Households) Producers (Businesses) Product Market (goods/services) Resource Market (land, labor, capital, entrepreneurs) Get a job!

29. Consumers (Households) Producers (Businesses) Product Market (goods/services) Resource Market (land, labor, capital, entrepreneurs) Get a job! Hire you!

30. Consumers (Households) Producers (Businesses) Product Market (goods/services) Resource Market (land, labor, capital, entrepreneurs) Get a job! Hire you! Make stuff!

31. Consumers (Households) Producers (Businesses) Product Market (goods/services) Resource Market (land, labor, capital, entrepreneurs) Get a job! Hire you! Make stuff! Buy stuff!

32. Consumers (Households) Producers (Businesses) Product Market (goods/services) Resource Market (land, labor, capital, entrepreneurs) Get a job! Hire you! Make stuff! Buy stuff! Spend $!

33. Consumers (Households) Producers (Businesses) Product Market (goods/services) Resource Market (land, labor, capital, entrepreneurs) Get a job! Hire you! Make stuff! Buy stuff! Spend $! Revenue $

34. Consumers (Households) Producers (Businesses) Product Market (goods/services) Resource Market (land, labor, capital, entrepreneurs) Get a job! Hire you! Make stuff! Buy stuff! Pay You! $ Spend $! Revenue $

35. Consumers (Households) Producers (Businesses) Product Market (goods/services) Resource Market (land, labor, capital, entrepreneurs) Get a job! Hire you! Make stuff! Buy stuff! Pay You! $ Get Paid! $ Spend $! Revenue $

36. Consumers (Households) Producers (Businesses) Product Market (goods/services) Resource Market (land, labor, capital, entrepreneurs) Get a job! Hire you! Make stuff! Buy stuff! Pay You! $ Get Paid! $ Spend $! Revenue $ All parts of the circular flow diagram are dependent on all other parts!

37. The End