Microeconomics 2011 Chapter 2 微观经济 讲解材料.ppt

My role for you;Why does food cost much more today than it did a few years ago? One reason is that we now use part of our corn crop to produce ethanol, a clean biofuel substitute for gasoline. Another reason is that drought in some parts of the world has decreased global grain production. We use an economic model—the production possibilities frontier—to learn why ethanol production and drought have increased the cost of producing food. We also use this model to study how we can expand our production possibilities; how we gain by trading with others; and why the social institutions have evolved.;Production Possibilities and Opportunity Cost;Production Efficiency We achieve production efficiency if we cannot produce more of one good without producing less of some other good. Points on the frontier are efficient.;Any point inside the frontier, such as Z, is inefficient. At such a point, it is possible to produce more of one good without producing less of the other good. At Z, resources are either unemployed or misallocated.;Tradeoff Along the PPF Every choice along the PPF involves a tradeoff. On this PPF, we must give up some cola to get more pizzas or give up some pizzas to get more cola.;Opportunity Cost As we move down along the PPF, we produce more pizzas, but the quantity of cola we can produce decreases. The opportunity cost of a pizza is the cola forgone.;In moving from E to F, the quantity of pizzas increases by 1 million. The quantity of cola decreases by 5 million cans. The opportunity cost of the fifth 1 million pizzas is 5 million cans of cola. One of these pizzas costs 5 cans of cola.;In moving from F to E, the quantity of cola produced increases by 5 million. The quantity of pizzas decreases by 1 million. The opportunity cost of the first 5 million cans of cola is 1 million pizzas. One of these cans of cola costs 1/5 of a pizza.;Note that the opportunity cost of a can of cola is the inverse of the opportunity cost of a pizza. One pizza costs 5 cans o