This document discusses three basic economic questions about using scarce resources: what to produce, how to produce, and for whom to produce. It also discusses production possibility frontiers (PPF), which show the maximum amounts of two goods an economy can produce given available resources and technology. PPFs illustrate the concept of opportunity cost, which is the amount of one good that must be sacrificed to produce more of the other good.

1. Introduction Chapter 1

2. Revision: Economics Trade-off Opp. Cost Scarcity Microeconomics Macroeconomics Positive Analysis Normative Analysis

3. Three Basic Economic Questions As an entrepreneur and as an economic agent, there are three basic economic questions you should ask when deciding how to use scarce resources: What to produce? How to produce? For whom to produce?

4. Production-possibility frontier In economics, a production-possibility frontier (PPF), sometimes called a production-possibility curve or product transformation curve The PPF shows the maximum amount of one commodity that can be obtained for any specified production level of the other commodity given the society's technology and the amount of factors of production available

5. Production-possibility frontier 0 5 5 4 9 3 12 2 14 1 15 0 Guns Butter

6. Efficiency PPF represent how much of the latter must be sacrificed for a given increase in production

7. Opportunity cost Opportunity cost is measured in the number of units of the second good forgone for one or more units of the first good.

8. Shapes (Increasing opp. Cost )

9. Constant opp. Cost

10. Decreasing opp. Cost