EC 111 Lecture Notes - Lecture 1: Price Signal, Invisible Hand, Industrial Revolution
2 Apr 2018
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Document Summary
Decrease in supply of natural resources with other things held equal is represented as an inward shift of the entire frontier. The essential feature of the market mechanism is the price signal. Marx more socialist outlook, government should own and control all aspects. Keynes= gov should be active but not all-inclusive. On a graph: perfect substitutes= straight line perfect complements= 90 degree angle. Two di erent types of e ciencies: (cid:12254) (cid:12254) (cid:12254) (cid:12254) The more people want an item, the more expensive it is and vice versa. Opportunity cost on a ppc if all resources are utilized. Productive e ciency: a situation in which the economy could not produce any more of one good without sacri cing production of another good. Allocative e ciency: state of the economy in which production represents consumer preferences. Technical e ciency happens when there is no possibility to increase the output without increasing the input.
