ECON 101 Lecture : notes taken on jan. 16 2012

31 views2 pages

carminehornet894

17 Jan 2012

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

hussam.sw and 39351 others unlocked

ECON 101 Full Course Notes

Verified Note

78 documents

Document Summary

Frontier- things that can be produced by one side. Trades happen because of different opportunity costs around the world. Developed by david ricardo- principle of comparative advantage. Specialization-> specialize on only one thing, and trade that with other to get satisfaction. Supply- all the supplies produced by companies. Demand- goods/products that all consumers (the market) want. Equilibrium- when total supplies = total demand. Market a group of buyers and sellers of a particular good or service. Competitive market- no single sellers or buyers can influence the price. While a firm is making lot of money, new firms can also enter the market. Have to sell products at market price, or else consumers will go for other companies. More competitions = more supplies; if demand stays the same, price per good will drop. If demand increase more that supplies, price increase. One seller have the power to control price. Strategic behavior- company a prices depend on rival s price and quantity.

Related Questions

In a competitive market, each seller has limited control over the price of his product because

a.other sellers are offering similar products.

b.in competitive markets, buyers have more influence over price than sellers.

c.the products sold in competitive markets are generally in abundant supply.

d.sellers in competitive markets prefer to meet and set a price that each will profit from.

amaranthwildebeest374

Comparative Advantage
Suppose Steve can specialize and produce either 1600 rugs and 0 paintings, or 0 rugs and 800 paintings; and Cindy can produce 250 rugs and 0 paintings, or 0 rugs and 1000 paintings, and assuming constant opportunity costs:

State which person has a comparative advantage in rugs. Explain why.

Using your answer in part a, if the terms of trade are 3 rugs = 2 paintings, and Steve

initially produces 900 rugs and 350 paintings, and Cindy initially produces 175 rugs and 300 paintings, what are the gains from specialization and trade to each person if Steve trades 600 units of the good he has a comparative advantage in?

Supply and Demand

Given QD = 800 â 2P and QS = 2P + 100, what is the market equilibrium price (P*) and

quantity (Q*)?

Suppose a change occurs in the market such that QDâ = 660 â 2P and QSâ= 2P + 100.

Calculate the new market equilibrium price (P**) and quantity (Q**).

Elasticity

From your answers in the supply and demand question above, use the mid-point

formula to calculate the price elasticity of supply (to two decimal places).

Using your answer in part a, is the price elasticity of supply elastic, inelastic or unit

elastic?

State how you were able to determine if the price elasticity of supply is elastic, inelastic

or unit elastic.

salmonwombat608

Which of the following statements is true about a competitive market?

a) A competitive market must have a physical location.

b) It has so many buyers and sellers that no one can influence the price.

c) It includes markets for goods and services but not for inputs.

d) It has a handful of sellers but always has many buyers.

e) It has one seller competing to sell his or her product.

ochrejackal539

ECON 101 Lecture : notes taken on jan. 16 2012

ECON 101 Full Course Notes

Document Summary

Get access

Related Documents

ECON 101 Study Guide - Midterm Guide: Marginal Utility, Marginal Cost, Invisible Hand

ECON 101 Chapter Notes - Chapter 9: Sunk Costs, Game Theory, Variable Cost

ECON 101 Chapter Notes - Chapter 1: Externality, Marginal Utility, Mass Production

Related Questions