week2

Question 1

How to determine if resources are allocated in the best possible way?

Answer 1

1. Production is efficient from a technical point of view. Can I produce it cheaper or not?
2. Producing the goods that society desires the more to maximize collective welfare
3. Exchanges must be efficient. How to distribute the production? Price mechanism/government intervention

Question 2

PPF:

Answer 2

Identifies all the combinations of good X and good Y that can be produced when all available resources are used efficiently.
Given a level of:
- Resources (Physical capital, labor, natural resources)
- Technology

Question 3

Opportunity cost

Answer 3

OC of is the slope of the PPF
For x = (après – avant Y)/ (après - avant X)