ECON 1050 Chapter Notes - Chapter 2: Marginal Cost, Human Capital, Comparative Advantage

74 views4 pages

Document Summary

Neoclassical theory- how individuals make choices with scarce resources. The quantity of good and services that we can produce are limited both by our available resources and by technology. If we want to increase our production of one good, we must decrease the production of the other good and will face a tradeoff. Points on ppf are preferred to points inside. Opportunity cost of shoes = delta c/delta s. Production efficiency- when we produce goods at lowest possible cost. Production is inefficient when inside the ppf and recourses are either misused or allocated, or both. Allocated meaning assigned skilled pizza chefs to work in the cola factory and skilled cola producers to work in the pizza factory. Resources and workers are not used to full capacity. Every choice along the ppf involves a tradeoff. 15 colas and 0 pizzas, but if you want to make 1 pizza you will have to make only 13 colas.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

Related Questions