c. How do we increase it? d. Why is it important? 10. What is human capital? How is it related to the wage one earns? 11. Production Possibilities Curve: a. What do "guns"and "butter" refer to? b. What is the significance of production inside / on / outside of the curve? c. What are the implications of efficient production? d. How can one calculate opportunity cost? e. What will shift the PPC? What can cause a one-sided shift? f. What is the law of increasing opportunity cost? (Why does the PPC usually have a bowed shape?) g. When would a PPC be a straight (non-bowed)line? 12. What is the difference between positive and normative statements? 13. Thinking at the margin: ink. Understand how to read a graph of marginal costs and benefits. b. What is marginal benefit? What is marginal cost? c. What is the difference between marginal benefit (or cost) and total benefit (or cost)? d. What does it mean to be a rational decision maker?

10. Human capital refers to the skills, knowledge, and experience possessed by an individual or population, which can be enhanced through education, training, and other forms of investment. It is related to the wage one earns because individuals with higher levels of human capital are typically more productive and can command higher wages.<br /><br />11. a. "Guns" and "butter" refer to military goods and civilian goods, respectively.<br />b. Production inside/on/outside of the curve represents inefficient/efficient/impossible production.<br />c. Efficient production means maximizing output with given resources.<br />d. Opportunity cost is calculated as the ratio of what is sacrificed to what is gained.<br />e. Factors shifting the PPC include technological advancements and resource availability; one-sided shifts can be caused by changes in technology or resources.<br />f. The law of increasing opportunity cost states that as production of one good increases, the opportunity cost of producing another good also increases.<br />g. A PPC would be a straight line if opportunity costs are constant.<br /><br />12. Positive statements describe what is, while normative statements describe what ought to be.<br /><br />13. a. Marginal benefit is the additional benefit from consuming one more unit of a good, while marginal cost is the additional cost of producing one more unit.<br />b. Marginal benefit and cost differ from total benefit and cost in that they consider the change in benefit or cost from consuming or producing one additional unit.<br />c. A rational decision maker maximizes net benefit by comparing marginal benefit and marginal cost.