EC120 Lecture Notes - Lecture 2: Social Cost, Allocative Efficiency, Technological Change

33 views3 pages
Verified Note
18 Sep 2018
School
Department
Course

Document Summary

Economic growth: economic growth, which is the expansion of production possibilities, results from capital accumulation and technological change, the opportunity cost of economic growth is forgone current consumption, the benefit of economic growth is increased future consumption. Firms coordinate a large amount of economic activity, but there is a limit to the efficient size of a firm: markets coordinate the economic choices of people and firms, markets can work efficiently only when property rights exist. When they are enforced, people have the incentive to specialize and produce the goods in which they have the comparative advantage: money makes trading in markets more efficient. Absolute advantage a person/country is more productive at something, excels and outperforms others in a large number of activities. Allocative efficiency a situation in which goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

Related Questions