ECON lecture 5 - 1 Magic of Exchange(Market All Can...

Info icon This preview shows pages 1–7. Sign up to view the full content.

Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 2
Image of page 3

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 4
Image of page 5

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

Image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 1. Magic of Exchange (Market): All Can Contribute a. Use of PPF (Opportunity Cost) b. Comparative Advantage a. Absolute Advantage b. Gains from Trade c. Differences in Culture and Tastes 2. Overview of An Economy a. Demand & Supply b. One Creates the Other c. Add Govt. Sector a. Supply & Demand: Mirror Images b. Market / Economy-wide Inferences 4. Digging Under Market D&S a. Limitations of Two-Dimensions b. Many Effects on D&S + PRICE c. Social Inferences Question of the Week #2 A major problem in organizing a complex, modern economy is determining what the true preferences are of its citizens. What do they need, and What makes them happy? Explain briefly how the saying: “Put your money Where your mouth is!” provides insights on the value of markets in solving this problem. Individual’s income (No. of Pizzas) 16 32 Total Steaks Demanded Individual’s income (No. of steaks) 2 4 8 16 Total Steaks Supplied Market for Steaks [Food for 4 days! Demand for Steaks (by Pizza Owners! Price Pizms/ Steak 1 2 4 Supply of Steaks (by Steak Owners) STEAK PRODUCERS You start with steaks. This is your total income for food for 4 days. (I) (2) (3) CHEQK : Exchange Ratio How many pizzas This leaves you with Income Pizzas/Steaks will you buy? how many steaks [2 + 1 ] + 3 = in Steaks 1. 2. 4. 8. PIZZA MAKERS You start with Pizzas. This is your total income for food for 4 days. (1) (2) (3) CHECK : Exchange Ratio How many steaks This leaves you with Income Pizzas/Steaks will you buy? how many pizzas [1 X 2 ] + 3 = 1n Pizzas l. MARKET FOR STEAKS Exchange Ratio (Pizzas/Steak) ! HI ! l l ! LH' Ill 2 4 6 8101214161820222426283032 > 0:653 103 9.333 OM65: wag, 588$. 30me QEE 95% 2a $325 wmfismam 00316:» © $9.933: 2.3.: floaty? >2 any: «mumEma. > CREE. 1.05 9mm 53 Amie... magi? mesa... mafia: l |# AauaJBdsueu mD>D 3.. 5x32 ...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern