ECON 3100 Lecture 1: ECON_Notes_Test_1

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Tells us the opportunity cost of increasing the production of one good (at the margin): ex. Suppose the economy decided to increase the production of computers (say by 1) the number of tvs produced declines by 3. The opportunity cost of computers in terms of. U = u(dfood, dcloth) d = demand, subscripts = different goods: marginal utility: the additional satisfaction obtained from consuming one more unit of a good. Indifference curves: represents all combinations of goods that yield the same level of utility: how do individuals behave, consumers want to maximize utility, sometimes they face constraints budget constraints, producers maximize profits. If the sale of a good is higher than the cost of producing the good. Individuals are price takers. equal to the supply of labor, adjusting the wage rate: production possibilities frontier (ppf, depends on the factors of production in the economy, labor, land, capital (machines, technology.

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