中微课件范里安版MicroCh31章节幻灯片.pptVIP

Production Possibilities Fish Coconuts Production possibility frontier (ppf) Production possibility set Production Possibilities Fish Coconuts Feasible but inefficient Feasible and efficient Infeasible Production Possibilities Fish Coconuts Ppf’s slope is the marginal rate of product transformation. Increasingly negative MRPT ? increasing opportunity cost to specialization. Production Possibilities If there are no production externalities then a ppf will be concave w.r.t. the origin. Why? Production Possibilities If there are no production externalities then a ppf will be concave w.r.t. the origin. Why? Because efficient production requires exploitation of comparative advantages. Comparative Advantage Two agents, RC and Man Friday (MF). RC can produce at most 20 coconuts or 30 fish. MF can produce at most 50 coconuts or 25 fish. Comparative Advantage F C F C RC MF 20 50 30 25 Comparative Advantage F C Economy F C F C RC MF 20 50 30 25 70 55 50 30 Using low opp. cost producers first results in a ppf that is concave w.r.t the origin. Comparative Advantage F C Economy More producers with different opp. costs “smooth out” the ppf. Coordinating Production Consumption The ppf contains many technically efficient output bundles. Which are Pareto efficient for consumers? Coordinating Production Consumption Fish Coconuts ORC OMF Output bundle is and is the aggregate endowment for distribution to consumers RC and MF. Coordinating Production Consumption Fish Coconuts ORC OMF Allocate efficiently; say to RC and to MF. Coordinating Production Consumption Fish Coconuts ORC OMF Coordinating Production Consumption Fish Coconuts ORC OMF MRS ? MRPT Coordinating Production Consumption Fish Coconuts ORC OMF O’MF Instead produce Coordinating Production Consumption Fish Coconuts ORC OMF O’MF Instead produce Give MF same allocation as before. Coordinating Production Consumption Fish Coconuts ORC OMF O’