ECON 1050 Lecture Notes - Lecture 2: Marginal Cost, Allocative Efficiency, Marginal Utility

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Goods and services that can be produced and those that cannot. Illustrates scarcity because the points outside the frontier are unattainable. Production possibilities frontier the boundary between those combinations of. Production efficiency achieved if we produce goods and services at the lowest. Inside the ppf inefficient because resources are unused or misallocated. Opportunity cost the highest valued alternative (ppf allows us to calculate this) Because resources are not all equally productive in all activities. Every point on the ppf cost and in the quantities that provide the greatest possible benefit. Allocative efficiency when goods and services are produced at the lowest possible. Marginal cost the opportunity cost of producing one more unit of it. Marginal benefit benefit received from consuming one more unit of it (subjective) Calculate marginal cost from the slope of ppf depending on peoples preferences relationship between the marginal benefit from a good and the quantity consumed.

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