ECON-UA 2 Lecture Notes - Game Theory, Isocost, Strategic Dominance
9 May 2013
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Document Summary
Microeconomics: analyzes the behavior of individual economic agents. Resources: land, labor, capital (machinery, buildings, highways, etc. physical and human capital), entrepreneurship. Society"s choice: how much of its resources to allocate. One kind of civilian good (wheat: want more of one, have to produce less of the other. Ppf (production possibilities frontier): curve showing all combinations of two goods that can be produced w/ the resources and technology currently available. The more of something we produce, the greater the opportunity cost of producing more of it. Reason: most resources are better suited to some purposes than others. Resources of producing free lunch could have been put to use in some other way. But possible if operating inside the ppf: productively inefficient, more of at least one good can be produced w/o sacrificing the production of any other good. Points outside the curve are unattainable right now with given level of resources. Businesses have strong incentives to eliminate productive inefficiency.
