ECON 101 Lecture Notes - Allocative Efficiency, Marginal Utility, Opportunity Cost
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ECON 101 Full Course Notes
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Document Summary
Production possibilities and frontier (ppf) Life is good and getting better. But we all face costs and must choose what we think is best for us. This chapter sharpens the concepts of scarcity and opportunity cost. It introduces the idea of economic efficiency. It also explains how we can expand production by accumulating capital and specializing and trading with each other. Is the boundary between those combinations of goods and services that can be produced and those that cannot. Points outside of the ppf line are unattainable and everything within the ppf line is attainable. Determines opportunity cost, marginal cost, and marginal benefit. A situation in which goods and services are produced at the lowest cost possible. All points on the line are efficient & all points inside the line are inefficient. Production is inefficient inside the ppf because resources are either unused or misallocated. > products are unused when they are idle but could be working.
