Economics 1021A/B Chapter Notes - Chapter 2: Allocative Efficiency, Marginal Utility, Marginal Cost

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ECON 1021A/B Full Course Notes
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ECON 1021A/B Full Course Notes
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Ppf illustrates scarcity because we cannot attain the points outside the frontier points outside the frontier describe wants that can"t be satisfied can produce any point inside the ppf or on the ppf, these points are attainable. Ppf is bowed outward because resources are not all equally productive in all activities. Preferences and marginal benefit quantity consumed of that good benefit and less we are willing to pay for it basic reason- we like variety. Economic growth: expansion of production is called economic growth, doesn"t overcome scarcity and avoid opportunity cost, to make our economy grow, we face a tradeoff- faster we make production grow, the greater is the opportunity cost. Gains from trade: producing only one good or a few goods is called specialization. Achieving the gains from trade: with trade, nations can move to a point outside their ppf, specialize in producing goods in which they have a comparative advantage.

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