ECN 201 Lecture Notes - Lecture 9: Ceteris Paribus, Normal Good, Inferior Good
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Outsourcing: producing something at a lower cost at a different country. Liz: produce = give up => 10b = 10a so 1b = 1a. Bread: produce = give up => 10a = 10b so 1a = 1b. Bread: produce = give up => 5b = 15a so 1b = 3a. Apples: produce = give up => 15a = 5b so 1a = 1/3 b. Liz has the comparative advantage in bread production because she has a lesser opportunity cost than brian (1b = Brian has the comparative advantage in apple production because he has a lesser opportunity cost than liz (1a = 1/3b vs. 1a = 1b): demanda. Demand deals with the willingness for consumers to buy a particular good; deals with the buyer"s side of the economy. If cost increases, willingness to pay decreases, then there is no i. demand.
