ADMS 1000 Lecture Notes - Lecture 2: Marginal Utility, Marginal Cost, Opportunity Cost

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ADMS 1000 Full Course Notes
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ADMS 1000 Full Course Notes
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Chapter 2: production possibilities and opportunity cost (textbook. Trade off= in order to increase the production of one good, you must decrease our production of something else. Production efficiency: this is achieved when you produce goods and services at the lowest possible cost. The marginal cost of a good is the opportunity cost of producing one more unit of it. We can calculate marginal cost by finding the slope of the ppf. (referring to the graph, quantity of pizza produced increases, the ppf gets steeper and the marginal cost of a pizza increases) The marginal benefit from a good or service is the benefit received from consuming one more u(cid:374)it of it. Preferences: describes what people like and want: production possibilities: describe the limits or constraints on what is reasonable. The marginal benefit curve shows the relationship between the marginal benefit from a good and the quantity being consumed of that good. (** mbc is unreleated to the ppf**)

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