AEM2300 - Ppt Lecture 3

AEM2300 - Ppt Lecture 3 - Lecture 3 BASIC DEFINITIONS(2...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
1 of Lecture 3 Prof. David Lee AEM/ECON 2300 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 )
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
2 of Lecture 3 Prof. David Lee AEM/ECON 2300 Production Possibility Frontier (PPF) X 1 X 2 B A C PPF Marginal Rate of Transformation (MRT) MRT = Slope of PPF at any point
Background image of page 2
3 of Lecture 3 Prof. David Lee AEM/ECON 2300 Production Possibility Frontier (PPF) X 1 X 2 B A C PPF Marginal Rate of Transformation (MRT) MRT = Slope of PPF at any point
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
4 of Lecture 3 Prof. David Lee AEM/ECON 2300 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 – e.g., what you give up of one good to get more of another)
Background image of page 4
5 of Lecture 3 Prof. David Lee AEM/ECON 2300 Production Possibility Frontier (PPF) X 1 X 2 B A C PPF Marginal Rate of Transformation (MRT) MRT = Slope of PPF at any point, indicates MC of prod’n
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
6 of Lecture 3 Prof. David Lee AEM/ECON 2300 First, consider what happens if marginal costs are constant
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 28

AEM2300 - Ppt Lecture 3 - Lecture 3 BASIC DEFINITIONS(2...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online