Microeconomics

Learn the toughest concepts covered in Microeconomics with step-by-step video tutorials and practice problems by world-class tutors

Introductory Economic Models

PPF - Increasing Marginal Opportunity Costs and Allocative Efficiency

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The more you want of something, the more you have to give up to get it. Economics dishing out those hard truths!

1

concept

Increasing Marginal Opportunity Costs

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4m
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2

concept

Allocative Efficiency with Marginal Analysis

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8m
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3
Problem

Chuggy wants to earn a high grade in his microeconomics class, but also loves going to parties and binge drinking. The first graph illustrates Chuggy’s PPF. The second graph denotes his MB curve from binge drinking.

What is Chuggy’s marginal cost of binge drinking if he parties for three hours a week? 

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Problem

If Chuggy achieves allocative efficiency, how many hours does he spend binge drinking per week?

5
Problem

What is Chuggy’s economics grade when he achieves allocative efficiency?