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Unformatted text preview: Who has the comparative advantage in the production of bread? Tulips? Why? When they trade the cost of bread will be between 3 and 5 tulips. Between 1/5 and 1/3 bread will be cost of tulips If trade can make everyone better off why is there opposition? People still lose jobs B. Buyers side of market: Demand 1. Definition 2. Not to be confused with Quantity Demanded 3. Determinant of Quantity Demanded a. Price of good (-) i. Link with Reservation Price 4. Determinants of Demand a. Income i. Normal good (+) ii. Inferior good (-) b. Price of related goods i. Substitutes: Increase price (+) ii. Complements: Increase price (-) c. Tastes and preferences (+) d. Expectations i. Future price (+) ii. Future income: normal good (+); inferior good (-) e. Number of buyers (+) III. NEXT TIME A. Continue Chapter 4: Supply and Demand...
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- Spring '08