ECON 25100 Lecture Notes - Lecture 1: Allocative Efficiency, Marginal Cost
28 Aug 2018
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Production possibilities frontier: graph of maximum output that can be produced with given resources. Example: for each bed that is made, a certain amount of bathrooms are cleaned, so slope is # of beds/# of bathrooms. Magnitude of slope reflects the marginal cost of. If scott can clean 4 bathrooms and marie can clean. 3 bathrooms, they can clean 7 bathrooms total (7,0) If scott can make 10 beds and maria can make 12, they can make 22 total (0,22) 7. 5 s m o o r d e b f o. Marginal cost of 1 car is 4 donuts. Slope from point a to point b is -4 (cars would go on the x-axis) Marginal cost from point b to point c is 6 donuts. Slope from point b to c is -6. Allocative efficiency: using resources where they are most highly value.
