AEM_ECON_2300_Lecture_4____Spring_2009

AEM_ECON_2300_Lecture_4____Spring_2009 - Professor David...

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Unformatted text preview: Professor David Lee AEM 2300 / ECON 2300 1 Lecture 4 Announcements Problem Set #1 is available on the "Assignments" web page (on blackboard). Please print this off, complete and turn in a hard copy version (not email attachment). Problem set 1 is due by 4:30pm, Thursday, Feb. 5, in Room 106 Warren For help on solving problem set, attend sections today (Tuesday, Feb. 3) 1.25 - 2.15pm (Plant Science 143) 3.35 - 4.25pm (Caldwell 100) Professor David Lee AEM 2300 / ECON 2300 2 Lecture 4 BASIC DEFINITIONS (3) Indifference Curve (IC) : curve showing all possible points of consumption of two goods which yield an equal level of utility or satisfaction. Marginal Rate of Substitution (MRS) : the amount of one product that a consumer (nation) must sacrifice in order to consume one additional unit of a second product and leave total utility unchanged (also the slope of the indifference curve at the point of consumption) Professor David Lee AEM 2300 / ECON 2300 3 Lecture 4 Recall from last class: BASIC DEFINITIONS (2) Production Possibility Frontier (PPF) : curve showing all possible combinations of outputs of two products that a producer (or economy) can produce with resources fully employed and the best available technology Marginal Rate of Transformation (MRT) : the amount of one product that a producer (or economy) must sacrifice in order to produce one more unit of another commodity (also the slope of the production possibility frontier at the point of production) Marginal Cost of Production (MC): cost of producing an incremental unit of a good or service (equivalent to MRT between 2 goods) Professor David Lee...
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AEM_ECON_2300_Lecture_4____Spring_2009 - Professor David...

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