Economics 1021A/B Lecture Notes - Lecture 4: Marginal Utility, Allocative Efficiency, Marginal Cost

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ECON 1021A/B Full Course Notes
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ECON 1021A/B Full Course Notes
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A cet-par (ceterius-paribus) change in the value of a variable on an axis of a graph brings a movement along the curve. A change in value of a variable held constant along the curve brings a shift of the curve. Also, allocative eiciency is the combination of producing at the lowest cost and bringing the greatest possible beneit. Economic growth increases our standard of living but doesn t overcome scarcity and opportunity cost. Economic growth comes from technological change and capital accumulation. Reduction in consumption today is the opportunity cost for more consumption tomorrow. The opportunity cost of economic growth is foregone current consumption. Comparative advantage occurs when a person can perform an activity at a lower opportunity cost. People should specialize in what they have a comparative advantage and gain from trade. A person who is more productive then the others has an absolute advantage.

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