Economic growth

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  1. Economic Growth Overview:
  2. 2 Factors of Economic Growth
    • Technological Change
    • Capital Accumulation
  3. How Economic Growth affects PPF
    • Chicken and Farms
    • Less consumption of chickens and more farms
    • More chickens in the future
  1. Understanding Economic Growth
    Suppose a company produces phones and laptops. The marginal cost producing each of these increases as more of it gets produced.
    1. Make a graph that illustrates the companies PPF.
    2. Suppose the company developed a new technology that uses fewer resources to create laptops. Use the graph to illustrate the impact of the new technology.
    3. What happens to the opportunity cost of producing cellphones? Has it increased, decreased, or stayed the same?
    4. Is the company more efficient with the new technology? Why or Why not?
  2. If economic growth such as capital accumulation and technological change shifts the PPF outward, allowing us to produce more and even more in the future, why do we still have scarcity?
    Topic Notes

    2 Factors of Economic Growth

    Technological Change: the development of new goods, and better ways of producing goods and services.

    Capital Accumulation: the growth of capital resources. This includes human capital as well.

    Note 1: For economic growth such as technological change or capital accumulation to happen, we must spend resources on that. By spending resources on research and development to produce these, we will have to decrease our production of consumption goods and services. In other words, the opportunity cost of economic growth is less current consumption.

    Note 2: An advantage of economic growth is increased consumption in the future.