econ201.ExchangeSupply

econ201.ExchangeSupply - they are willing to offer more of...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Exchange and Supply I. What is the basis of trade? II. The Supply Side A. It does not follow that ownership of a good implies consumption of a good B. The cost of actually consuming a good is the maximum amount of other goods that one could get by forgoing consumption C. Opportunities for exchange raise the cost of consuming a good to what the highest bidder would be willing to pay to acquire the good. D. In the absence of production, the quantity supplied of a good (at a specific price) is the amount of the good some person who currently owns the good is willing to give up E. As prices rise, owners choose less of their own good for personal consumption. Thus,
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: they are willing to offer more of the good for sale to others a. Supply curves are generally upward sloping F. What role do middle-men play? a. They play match-maker in exchange for part of the marginal-value differential. b. Trade occurs because some people have too much of some goods…do you agree? Yes, because some don’t have enough. c. Can an individual be made worse off by having the option to trade? No. some trade is preferred to no trade. d. What is the source of the mutual benefit from exchange? 1. Where different people have different marginal values for a good...
View Full Document

This note was uploaded on 04/05/2008 for the course ECON 201 taught by Professor Wadell during the Winter '08 term at University of Oregon.

Ask a homework question - tutors are online