Review Notes - The Production Possibility Model

- assumption of the model

- scarcity

- understanding the model

- what does the frontier represent/how does it divide up the production space?

- how does the frontier move?

- increase or decrease in technology?

- increase or decrease in resources?

- how is opportunity costs demonstrated in the model?

- What does the model show?

- Scarcity

- Technological efficiency and inefficiency

- Unemployment and full employment of resources

- Opportunity cost

- Law of diminishing returns/law of increasing (opportunity) costs (what is the difference between the two?)

- How choices made today affect future production possibilities