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Unformatted text preview: Division of Labor and Supply and Demand and Division of Labor Division Definition Adam Smith’s explanation Examples from class Economic Gains From Division of Labor Labor Increased productivity
– Specialization – Learning, practice and innovation – Economies of scale Effects on income levels Effects Division of labor between countries Storehouse Example Storehouse Transfer of goods Mixture of goods in warehouse Honor system Valuation of goods Decentralized economy Circular Flow Diagram Circular Goods markets Labor Market Capital market Prices in the Market Prices Judgment of prices Diamond – water paradox Setting of prices in market Demand Demand Definition Graphing demand Changes in demand Changes in demand vs. changes in quantity Changes demanded demanded Supply Supply Definition Graphing supply Changes in supply Changes in supply vs. changes in quantity Changes supplied supplied Equilibrium Equilibrium Definition Efficiency Effects of shifts of supply and demand Effects of Supply and Demand Effects Not every one is pleased with equilibrium Supply and demand curve not carried on Supply shopping trip shopping People really don’t think that way Testing the system Price Floors and Ceilings Price Definition Examples of price floor Example of price ceiling Political Activity Political The political battle Effect of price ceilings When demand exceeds supply Adjustments in market Political Activity Political The political battle Effects of price floor When supply exceeds demand Adjustments in the market Effect of Floors and Ceilings Effect Price regulation Old Soviet model The effects on the market Range of answers Range Affordable housing Decent standards of living Political reasons for floors and ceilings ...
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