ECON 1 Lecture Notes

ECON 1 Lecture Notes - ECON1LectureNotes4 01/10/201015:00:00

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ECON 1 Lecture Notes 4 01/10/2010 15:00:00 OC of x = loss on y / gain in x = absolute value of slope of PPC OC increases as you go down the curve Increasing Opp. Cost As we produce more of a good, the OC of the good increases Why? Because resources are not all equally productive in all activities Food and Healthcare Services o Big decrease in food / small increase in healthcare = big # o ^ OC of healthcare OC of food = big drop of health care services / small increase in food = big # Where does comparative advantage come from? Climate and natural resources Relative abundance of labor and capital Technology External economies: lower production costs that result from increases in the  size of the industry in an areas Economic Growth and PPC
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Increases in productive resources   PPC will shift outward Improvements in knowledge or technology o General technology o Product-specific technology OC doesn’t change after technological improvement When slope increases, OC increases. OC cars = loss in comps / gain in cars = same/bigger SUM IT UP: 1. specialization increases productivity 2. trade allows the benefit of specialization to be realized 3. the theory of comparative advantage applies to both individuals and nations why are so many ppl against free trade? o NAFTA o Outsourcing of jobs Cost can be concentrated among small #s of ppl “infant industry” argument
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Econ 1 Lecture Notes 5 01/10/2010 15:00:00 Chapter 3 – Supply and Demand
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What, How, and For Whom? WHAT: Which good will be produced? How much of each? HOW: Which technology? Which resources are used? FOR WHOM: How to distribute? Central Planning v. Market Central Planning Decisions by a few individuals or small groups The Market Buyers and sellers signal wants and costs Interaction of supply and demand answer the 3 basic questions
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Mixed economies use both the market and central planning The Market Market: a group of buyers and sellers of a particular product Two sides: o
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ECON 1 Lecture Notes - ECON1LectureNotes4 01/10/201015:00:00

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