00:01
So here we have two questions.
00:02
The first one is about the production possibilities frontier.
00:05
And let's try to visualize this first as always a good idea in economics.
00:11
So production possibilities frontier shows what an economy is capable of when choosing between multiple goods.
00:18
Let's just say x and y.
00:20
And we're thinking about a point inside the production possibilities frontier, like this point a, right? so the whole idea here is that this is in a.
00:30
Because you could have more, right? you can achieve a point b and b is clearly better than a.
00:39
So by choosing to stay at a, you are making a big sacrifice, right? when you could have more, you are giving up a lot of stuff that doesn't need to be given up.
00:48
So let's look at the options that are available to us.
00:52
One, you can produce more, right? so one is obviously wrong.
00:57
It's not there is there's plenty of ability to produce more to um the opportunity cost right this is precisely the right answer if you stay at a there's a big opportunity cost when you choose to stay at a instead of going to be the opportunity cost is what you forego you are giving up the extra x and y that you could get by moving to b right um three um maximum unsustainable, well, this doesn't even really apply because we could just do better.
01:35
We don't have to go to the maximum.
01:38
Even going to a place like c, which is still not the maximum, would be a lot better, right? so maximum has nothing to do with it...