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Menu_26_Aug_10 - opposition to it 2 Tool Production...

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TODAY’S MENU: Thursday 26 August 2010 I. BUSINESS A. Practice Problems (answers on Moodle) 1. Chapter 1: 6-12, 16-18, 21 2. Chapter 2: 1, 2, 4-8, 10 II. SUBSTANCE A. Examples of Economic Reasoning 1. A question 2. Either/or Choices a. Bibi the tutor, parts 1 and 2 i. Relevant costs ii. Sunk costs 3. How much/many Choices a. Stasia and the Smorgasbord i. Relevant costs ii. Sunk costs 4. The answer a. Delta and the Mayor i. Relevant costs B. Positive vs. normative economics C. Note on graphing: Appendix to Chapter 2 D. Opportunity Cost Application: International Trade 1. Questions to Answer a. If “workers in the United States are the most productive in the world,” why do we consume so many imported goods? b. If “trade can make everyone better off,” why is there so much
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Unformatted text preview: opposition to it? 2. Tool: Production Possibilities Frontier (PPF) a. Efficiency b. Numerical Slope = Opportunity Cost c. Optimal Point? d. Economic growth E. How Trade Can Benefit All: An example 1. Assumptions a. Two Countries: England, Portugal b. Two Goods: Wine, Cloth c. All workers in a country are equally productive d. Resources: 100 worker/hours in each country 2. Relevant Concepts a. Productivity = output per worker per hour b. Absolute Advantage = highest productivity c. Comparative Advantage = lowest opportunity cost III. NEXT TIME A. Finish Chapter 2 Finish Chapter 2: “The Production Possibility Model…” B. Begin Chapter 4: “Supply and Demand”...
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