Economics 1021A/B Chapter Notes - Chapter 2: Opportunity Cost, Marginal Utility, W. M. Keck Observatory

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ECON 1021A/B Full Course Notes
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ECON 1021A/B Full Course Notes
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Marginal cost: opportunity cost of producing one more unit of it calculated from slope of ppf. Marginal benefit curve: used to illustrate preferences, shows the relationship between the marginal benefit from a good and the quantity consumed of that good (unrelated to ppf) Principle of decreasing marginal benefit: more we have of a good = smaller marginal benefit: reason: we like variety tire of having too much of something. Specialization: producing only one good or a few goods. Comparative advantage: performing an activity at a lower opportunity cost than everyone else. Involves comparing opportunity costs: differences in opportunity costs: arise from differences in individual abilities and from differences in characteristics of other resources. Absolute advantage: person who is more productive than others. Involves comparing productivities (production per hour: does not have comparative advantage in every activity. Technological change: development of new goods + better ways of producing goods/services. Capital accumulation: growth of capital resources, including human capital.

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