Week 3 Trading Gains-Advantages of a Firm

Week 3 Trading Gains-Advantages of a Firm - WEEK 3 FEBRUARY...

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WEEK 3 FEBRUARY 5, 2010 TRADING GAINS GENERAL VS. SPECIFIC  KNOWLEDGE CONTRACTING COSTS ADVANTAGES OF A FIRM
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ANNOUNCEMENTS Tutoring Hours: 2057 BIF Sundays 6-8pm Mondays – Wednesday 7-9pm Review Session Sunday, February 7 th 1-2pm 141 Wohlers Mini-Test I Tuesday, February 9 th  regular class time/location Quiz #3/Syllabus Quiz Both  due this Sunday, February 7 th  by 11pm
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CALCULATING GAINS FROM TRADE Occur because a voluntary trade is  mutually  advantageous Not necessarily equal Importance of good accounting estimates Consider ALL costs of selling/buying a good or service If a cost is omitted, a trade thought to be advantageous,  will be less advantageous or possibly a loss
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PAGE 150, #6 Seller is willing to sell an item for as little as X.  Buyer is willing to pay as much as Y for that  item. At which price will a trade take place: a) P – X = Y – P; P – X > 0 b) P – X > Y – P; Y – P > 0 c) Y – P > P – X; P – X > 0 d) All of the Above e) None of the Above
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PAGE 149 #5 John and Ellen bargain over an item John is  trying to sell. They negotiate a price of $1,000.  John’s gain is $300. Ellen’s gain is $200. Which of  the following is true? a) John’s private price was $1,200 b) John’s private price was $700 c) The trade is not mutually advantageous d) Two of the above e) None of the above
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This note was uploaded on 02/14/2011 for the course ECON 302 taught by Professor Avrin-rad during the Spring '09 term at University of Illinois, Urbana Champaign.

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Week 3 Trading Gains-Advantages of a Firm - WEEK 3 FEBRUARY...

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