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Lecture

Lecture 004 (September 30th, 2013).docx

2 Pages
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Department
Economics
Course Code
ECO105Y1
Professor
Avi Cohen

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Description
Model of Pricing. Demand at dinner time is more inelastic. So price is raised. And in other times, it is more elastic. Law of the Supply Recognize parallels between demand and supply. What does it really costs? Costs are opportunity costs? Businesses must pay higher prices to obtain more of an input because opportunity costs change with circumstances. Marginal Cost is the additional opportunity cost of increasing quantity supplied and this changes with circumstances. Marginal Cost increases as you increase quantity supplied.   To buy inputs, business must pay price matching best opportunity cost of input owner. Sunk Costs are past expenses that cannot be recovered.  Same no matter which fork in the road you take. Not part of opportunity cost. Quantity Supplied is the quantity you actually plan to supply at given price. Supply is the businesses willingness to produce a particular product service because price covers all opportunity costs. Profit and covering Opportunity Costs are the reasons for increasing supply. There is unevenness in opportunity costs because not all inputs are productive at the same rate. Everybody is good at piercing but not with fingernails. There is different level of productivity for inputs. Concave line INDICATES there is difference in opportunity cost. Straight line indicates constant one. Market Supply is the sum of all businesses willing to produce a particular product/service.  As price goes up, quantity supplied go
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