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EC 201 9-5-08 - o Market organized system of communication...

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EC 201 9-5-08 opp. Cost ppf comparative advantage o foundation for trade between individual people & trade between countries o formula for prosperity is to specialize in relatively good at & trade with others who are relatively good at other activities o relatively good at o person or country has comp. adv. In an activity if its opp. Cost of that activity is lowest o US has comp. adv. Commercial aircraft Wheat Software Tools, measuring o Saudi Arabia has comp. adv. Petroleum How to deal with job loss due to trade? o 1. Cut off trade o 2. Economists idea: encourage trade Take steps to help those who are harmed Specialize & trade Supply: behavior of sellers Demand: behavior of buyers To have a transaction o Need a willing buyer & willing seller o Voluntary transactions
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o Buyers & sellers get together in markets
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Unformatted text preview: o Market: organized system of communication between buyers & sellers • Demands for cups of coffee o Influences on buyers of coffee taste/ preferences incomes prices of other goods • tea, pop, cream, sugar • expectations of future prices and incomes o price of coffee o 2 categories of influences on buyers 1. Price of good 2. Everything else – incomes, tastes, etc. • Demand schedule – table of price & quality demanded o Holding all else equal Marilyn D schedule for teddy bear Inverse relationship between P + Qd • P↑→Qd↓ • P↓→Qd↑ • “law of demand” • All else equal • Demand curve- graph of info. In D schedule • Graph of P + Qd all else equal • Law of Demand → D curve o Slopes downward (L to R)...
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