Production Possibility Frontier (October 21th, 2011)

Trade and Exchange
Trades can have technicalities such that a rare ore can be sold for wheat but they can end up making a moon cake and a laptop.

Rizzo did an example with his house being 120 yards and his friend Rich having the same amount of yards. They both have 10 acres of land in which they weed and mow.

• Rizzo takes 80 minutes to weed and mowing takes him 40 minutes which adds up to 120 minutes.
• Rich on the other hand  takes 120 minutes to weed and 120 minutes to mow, which adds up to 240 minutes.

Rich offered to weed 3/4 of Rizzo's driveway if Mike mows  his yard.

• Rizzo will then take 20 minutes to pick weeds from his yard, 40 minutes to weed out the yard of Rich and 40 minutes to mow his yard, which will add up to 100 minutes. 
• Rich will take 120 minutes to weed his yard, and 90 minutes to weed out Rizzo's yard. Since he doesn't need to mow his yard, he ends up using 210 minutes of his life.
• Although unfair because Rizzo takes less than half the time Rich does, it benefits them both because they both gain time from doing the offer.

Production Possibility Frontier
There is 1000 Jibbitz and 2000 Coon Skin Hats. Rizzo can only produce this if he is given the resources, knowledge, and technology.
Properties of PPF's:
1) All points in the cure are achievable.
2) In comparison to Rizzo and Mrs. Rizzo, Rizzo has a absolute advantage over his wife at making Coon Skin Hats but she has an absolute advantage with the Jibbitz.
3) All points outside of the curve are unachievable given the resources, knowledge and technology given to Rizzo.
4) Points on the PPF are "productively efficient" (getting what people want at a low price).
5) Slope There are tradeoffs for hats and Jibbz. The slope is the magnitude of the tradeoff.
6) Change in slope - Law of Diminishing Returns (Increase in opportunity cost).
7) Economic Growth.

1. Resources
2. Technology
3. Trade

Cooperative Advantage