ECON 102- Midterm Exam Guide - Comprehensive Notes for the exam ( 21 pages long!)

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ECON102 Full Course Notes
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ECON102 Full Course Notes
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Production possibilities frontier (ppf: boundary between combination of goods and services that can be produced and those who can not be produced, the ppf focuses on two products, assumes quantities of all other goods are constant (certeris paribus) Z is inefficient because more of one good can be produced without giving up another good. Trade-off: tradeoff occurs along the ppf, give up one product to make more of another product, opportunity cost occurs as we move down the ppf, measured by the next best alternative forgone. Increasing amounts for the other good must be given up. Economic growth: expansion of production possibilities, two factors, technological change, development of new goods and of better ways of producing goods and services, capital accumulation, growth of capital resources, which includes human capital. Both: a higher price will accomplish this outcome. Firms have incentive to make ore: disincentive for consumers. Illustrates how households and firms interact in the market economy.

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