ECON 1B03 EXAM REVIEW LECTURE

ECON 1B03 EXAM REVIEW LECTURE - ECON 1B03 EXAM REVIEW...

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ECON 1B03 EXAM REVIEW OPPORTUNITY COST = what you give up to get something else - the best forgone alternative EXAMPLE: To get 3 CDs, give up 1 DVD To get 1 CD, give up 1/3 DVD => Opp. Cost of a CD is 1/3 DVD COMPARATIVE ADVANTAGE = you have it if your opp. cost of producing a good is lower than someone else’s => specialization and gains from trade ABSOLUTE ADVANTAGE = your economy is more productive in all goods CHANGE IN DEMAND = shift of the demand curve due to a change in income, taste, population, prices of related goods, expectations CHANGE IN QUANTITY DEMANDED = movement along the demand curve due to a change in the price of the good CHANGE IN SUPPLY = shift of the supply curve due to a change in production costs, number of firms, expectations, prices of related goods produced CHANGE IN QUANTITY SUPPLIED = movement along the supply curve due to a change in the price of the good NORMAL GOOD = when income increases, demand increases
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INFERIOR GOOD = when income increases, demand decreases ELASTICITY = measures the responsiveness of quantity of a good demanded (or supplied) to a change in: - price of the good
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This note was uploaded on 04/19/2008 for the course ECON 1B03 taught by Professor Hannahholmes during the Spring '08 term at McMaster University.

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ECON 1B03 EXAM REVIEW LECTURE - ECON 1B03 EXAM REVIEW...

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