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Class Lecture 2
Class Lecture 2
called a trade-off.
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The Market System
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Marginal Costs Marginal benefits
gas, other car expenses $1.00 knowledge $0.75
higher lifetime income due $4.00
paper & ink used $0.30 to better economics grade
earned because you learned
about opportunity costs
opportunity costs $3.00 in class today
were able to socialize with $0.25
total marginal costs $4.30 other students
total marginal benefits $5.00
Positive externality
Negative externality
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1. Allocative Efficiency
2. Technological Efficiency.
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