ECON 1000 Lecture Notes - Lecture 2: Absolute Advantage, Comparative Advantage, Marginal Utility

• School: York University
• Department: Economics
• Course: ECON 1000
• Professor: George Georgopoulos

Document Summary

Production possibilities frontier (ppf) boundary between combinations of goods that can be produced, and those that cannot. Production efficiency when we produce goods at the lowest possible cost (any point on the ppf line) Production inside the line means that some resources are either being wasted or not used to the best of their ability. The line shows us there is a limit to what we can produce, and that some things are not possible. We can produce more of one thing only if we produce less of something else. Opportunity cost highest-valued alternative that we gave up. Expressed as a ratio decrease in the quantity of one good divided by increase in the quantity of another good (the opportunity cost of the other good would just be the inverse) Allocative efficiency produced at lowest possible cost which provide greatest possible benefit. Marginal cost opportunity cost of producing one more of something (slope of ppf)