Jingxian TA1

Jingxian TA1 - ECON1110 TA Section 1 Professor Jennifer...

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ECON1110 TA Section 1 Professor Jennifer Wissink TA Jingxian Zheng Jan 22, 2009 1 Concepts Review 1. Product Possibilities Frontier A description of possible or feasible combinations of outputs an economy can produce, using all of the available resources efficiently . Because of the scarcity of resources, it shows the trade-off between two goods: the slope is negative. Two conditions of PPFs: the bowed-out curve and the straight line. See Graph 1. 2. Marginal Opportunity Cost (MOC) Marginal: In economics, marginal concepts are associated with a specific change in the quantity used of a good or service, as opposed to some notion of the over-all significance of that class of good or service, or of some total quantity thereof. Opportunity cost: The best alternative that we give up. "Second best". MOC of output A in terms of output B: The units of B sacrificed to produce one more output A: MOC A = | slope of PPF | = - slope of PPF = 4 B 4 A MOC B = 1 MOC A Note: A is the good in horizontal axis. So if the PPF is a "bowed-out curve", the MOC is increasing; if the PPF is a "straight line", the MOC is constant. 2
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This note was uploaded on 09/19/2009 for the course ECON 101 taught by Professor Burkhauser during the Spring '08 term at Cornell.

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Jingxian TA1 - ECON1110 TA Section 1 Professor Jennifer...

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