Substitute Goods - decreases Market and Prices • Economic...

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Econ 4.3 Friday, January 29, 1999 Announcements: The first exam will be Monday, February 1. It will be multiple choice. Bring a #2 pencil. Exam 1 Comments Markets, Demand and Supply Multiple choice exam #2 Pencil Includes text chapteres 1-5 Know terms and concepts, usually listed at end of chapter Policy for missed exams (see syllabus) Ability to interpret graphs Think analytically Practice Case/Fair website To calculate your grade: Divide score by 33, multiply by 100 and then match grade up with the syllabus Lecture notes: Substitute Goods When P of one good rises, Q of substitute good sold increases When P of one good falls, Q of substitute goods sold falls The price of pizza goes us when the quantity of burgers sold rises Complementary Goods When quantity of one good sold rises, Q of complementary good sold
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increases When quantity of one good sold falls, Q of complementary good sold
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Unformatted text preview: decreases Market and Prices • Economic discrimination and resource allocation o Price discrimination o Age o Gender o Race o Time o Geographic • Planners' Preferences Price Ceilings: Rent Control • Price Ceiling: a maximum price that sellers may charge for a good, usually set by government • Price ceilings below the equilibrium are a shortage and price ceilings above the equilibrium are a surplus Trade of Comparative Advantage and Absolute Advantage • Absolute Advantage: the advantage in the production of a product enjoyed by one country over another when it uses fewer resources to produce that produc than the other country does • Comparative Advantage: the advantage in the production of a product enjoyed by one country over another when that product can be produced at lower cost in terms of other goods than it could be in the other country...
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