ECON 201 1st Edition Lecture 3 Outline of Last Lecture I Marginal Costs and Marginal Benefits a Economic decision rule II Opportunity Costs a TANSTAAFL III Economic and Market Forces IV Economic Insights V Economic Institutions VI Objective Policy Analysis Outline of Current Lecture I Introduction to PANSTAAFL a Production possibility curve II Production Possibility Curve for society a Comparative advantage III Efficiency a Production Efficiency Current Lecture I Production possibility model trade and globalization Chapter 2 a Introduction to TANSTAAFL i A production possibility curve is used to illustrate opportunity cost It shows the trade offs among choices we make ii A production possibility curve PPC measures the maximum combination of outputs that can be achieved from a given number of inputs It slops downward from left to right b A production possibility curve for society i The production possibility curve is generally bowed outward 1 Some resources are better suited for the production of some goods that others 2 Comparative advantage explains why opportunity costs increase as the consumption of a good increase These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute a The one with lower opportunity cost in production should produce it 3 The Principle of increasing marginal opportunity cost states that opportunity coasts increase the more you concentrate on an activity 4 In order to get more of something one must give up ever increasing quantities of something else c Efficiency i Productive efficiency achieving as much output as possible from a given amount of inputs or resources or achieving a goal as cheaply as possible On PPC ii Inside PPC inefficiency more is possible iii Outside PPC unattainable iv PPC focuses on productive efficiency and ignore distribution
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