EC120 Lecture Notes - Lecture 1: Opportunity Cost, Liquor Control Board Of Ontario, Comparative Advantage
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EC120 Full Course Notes
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Normative questions don"t have a right answer. For example, some normative questions could start with should . In developed countries, there is a better measurement of higher income than lower income because of taxation and tax brackets on the rich. Similarly, in lesser developed countries, people with higher income can hide it better from the government, so those countries have a better measurement of low income than higher. Water is plentiful, doesn"t provide additional satisfaction if you keep consuming. Efficiency doesn"t necessarily mean it"s a good or bad thing, it simply just means efficient. Ex: building 1000 cars and no houses (if it"s a point on the ppf curve/line) is efficient but doesn"t mean it"s good because there would be many homeless people if no houses are being produced. If the slope is 10, opportunity cost is reciprocal: 1/10. The production possibilities frontier doesn"t illustrate equity, which is fairness in taxation, welfare, etc it only highlights trade-offs/opportunity cost and efficiency/feasibility.
