Intro to Microeconomics_Agnello_Date_021810

# Intro to Microeconomics_Agnello_Date_021810 - Benefit of...

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Production Possibilities Frontier (PP) - Graphically Illustrates many economic principle - Defines: - Scarcities - Trade-offs - Choices - Cost (opportunities given up) - Efficiency (points on the graph where are resources are used) - Inefficiency (any interior points in the graph) - Unemployment costs - Underemployment costs - Technological change (The curve could expand given certain changes in population, economy and the amount of resources) - Economic growth (The curve could expand given certain changes in population, economy and the amount of resources) - Benefit of trade
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Unformatted text preview: - Benefit of specialization- Shows 2 goods (x,y)- Meaning of being on the PP curve for an individual, country, organization, family etc- Technical Efficiency- Maximum “x” given “x”- Maximum “y” given “x”- Slope ∆y/∆x reflects cost in moving from one possibility to another- MCx = ∆y/∆x- MCy = ∆x/∆y- MCx = 1/MCy- Law of increasing costs => PP curve is bound outward- Graphically - constrain yourself outwards- PP = locus of maximum y given x points- Ex: ∆x = 100 ∆y =200; MCx is x =2y or MCy is y = 1/2 x-...
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## This note was uploaded on 08/30/2010 for the course ECON 151 taught by Professor Harris during the Spring '07 term at University of Delaware.

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