Lecture 4

Lecture 4 - China vs US Chinese – Command but some...

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1. 2. Econ Sys 3. D a. Def b. Law of Demand c. Graph d. Movement vs shift 4. S a. Def b. Law of Supply c. Graph d. Movement vs Shift 5. 6. Shocks/Adj. 7. Welfare Measures 8. Examples Bring Blue book/check cover sheet/two different classrooms for midterm Label graphs, don’t be ambiguous** Resources are not homogeneous but hours/labors are Cain Abel Fish 1 2 Wheat 1 5 For working one hour with the same amount of resources Abel is a better worker For Cain the cost of producing one fish is one wheat, one wheat is one fish For Abel the cost of producing one fish is 2.5 wheat, one wheat is 0.4 fish
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ToT – Terms of Trade 1F : (1,2.5)W For 1 fish: (What Cain is willing to pay, what Abel is willing to pay)W Terms of Trade has nothing to do with PPF/resources For a ToT of 1F:1.5W, Cain can get 15 Wheat for 10 Fish Command (Planned/Communism) vs Market (Capitalism) Economy
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Unformatted text preview: China vs US Chinese – Command but some aspects of Market such as the factory worker fixing bikes at night Capitalism Communism Property Rights Private Public Choice Free Paternalistic Employment Free Iron Rice Bowl (cannot fire) Fair Rational Noble = (Egalitarianism) Noble – people start differently but finish all together Demand – the quantity consumers are willing and able to buy at various prices Supply – the quantity the firms are willing and able to produce at various prices Quantity = F(Price), go to Ralphs look at price and then decide the quantity Law of demand – prices go up people buy less, vice versa, Δ Q/ Δ P < 0 negatively, inversely related Law of supply - Δ Q/ Δ P > 0 positively related, price is the reward Finish chapter 3...
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This note was uploaded on 07/05/2011 for the course ECON 1 taught by Professor Nagata during the Spring '08 term at UCLA.

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Lecture 4 - China vs US Chinese – Command but some...

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