ECON101 Lecture Notes - Lecture 3: Marginal Utility, Marginal Cost, Comparative Advantage

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cerisegiraffe538

29 Sep 2015

School

University of Waterloo

Department

Economics

Course

ECON101

Professor

Wokia Kumase

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ECON101 Full Course Notes

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Econ101 004 lecture 3 - using resources efficiently. The ppf determines marginal cost (slope of ppf) Marginal cost: the additional opportunity cost of producing one more unit of it. Marginal benefit curve: shows the relationship between the good and the quantity of the good. Note: marginal benefit curve is unrelated to ppf; you can only derive marginal cost from ppf. The principle of decreasing marginal benefit: the falling satisfaction we derive from consuming an additional g/s. Since each additional g/s is worth less and less to us with a smaller marginal benefit, we are willing to pay less for an additional unit of it marginal benefit from a. Allocative efficiency: any points on the ppf are efficient. To use resources in research and development and to produce new capital, we must decrease our production of consumption g/s. Therefore, economic growth it not free, and does not abolish scarcity.

Related Questions

1. the marginal cost curve is

A. Downward sloping to reflect the bowed out PPF.

B. Downward sloping as marginal benefits increase.

C. Upward sloping because marginal cost falls as more of a good or service is produced.

D. Upward sloping to reflect the increasing opportunity cost of producing one more unit.

E. U-shaped to reflect the bowed out PPF.

2. Allocative efficiency occurs

A. Anywhere inside or on the production possibilities frontier.

B. When the total cost of production is minimized

C. At all points on the production possibilities frontier.

D. At only one point on the production possibilities frontier.

E. At the points where the production possibilities frontier crosses the horizontal or vertical axis.

3. Auditors working for a large accounting firm are often away from the office. When they are in the office, they are allowed to use any desk that is available. Which method is used to allocate desks?

A. lottery

B. first-come, first-served

C. Command

D. Contest

E. Sharing equally

4. The marginal cost of a good or service

A. Can be calculated from the marginal benefit of that good or service.

B. decreases as more of the good or service is produced.

C. Can be derived from the production possibilities frontier.

D. Graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping.

E. None of the above answers is correct.

5. The maximum amount of other goods and services that people are willing to give up in order to get one more unit of a good is defined as the good's

A. Marginal benefit.

B. Total benefit.

C. Marginal cost

D. Total cost.

E. Price.

5. The marginal benefit curve for a good A) shows the benefit a firm receives from producing one more unit of that good. B) shows the most a consumer is willing to pay for one more unit of that good. C) is upward-sloping. is bowed outward. E) is none of the above.

16) The marginal benefit curve for a good A) is upward-sloping. B) shows the benefit a firm receives from producing one more unit of that good. C) shows the most a consumer is willing to pay for one more unit of that good. D) is bowed outward. E) none of the above.

ECON101 Lecture Notes - Lecture 3: Marginal Utility, Marginal Cost, Comparative Advantage

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