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Unformatted text preview: agents in an economy can produce. (Graph 1) Absolute Advantage- Belongs to the person that can produce more with a given amount of resources. Comparative Advantage- Belongs to the person that has the lowest opportunity cost of a task. The Law of Comparative Advantage- Output can be increased if people specialize in tasks where they have comparative advantage. For specialization to be effective than the people need to trade their stuff Chapter 3: Substitutes Everywhere, The concept of demand What is demand?: The relationship between the price of a good and the quantity demanded of the good The Law of Demand: The price of a good and the quantity demanded are inversely related, all other things held constant Not actually a law, it could theoretically be violated...
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This note was uploaded on 03/23/2012 for the course REL 1310 taught by Professor Holleyman during the Fall '08 term at Baylor.
- Fall '08