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In a previous lesson we introduced the basic economic concepts of scarcity, opportunity cost, and the production possibilities curve (PPC). In that lesson, we examined the tradeoffs an individual faces in the use of her time between “work” and “play”. We showed that the opportunity cost of one hour of work is always the one hour of play that the individual could have enjoyed instead. The constant opportunitiy cost between work and play is illustrated in the PPC model as a straight line production possibilities curve. In this lesson, we will expand our understanding of the PPC and opportunity costs [More]
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