ECON 1 Lecture Notes - Lecture 1: Profit Maximization, Price Discrimination, Taco

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ECON 1 Full Course Notes
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ECON 1 Full Course Notes
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David ricardo, principles of political economy and taxes 1817. Country can gain from importing good even if it"s more productive in producing that good. Each country should specialize in direction of its comparative advantage, could then trade its specialty, both countries will be better off. Loaves per fish = bread productivity / fish productivity. If answer > 1, then should specialize in that. Find out what price would work for fish and bread (avoid complete specialization) Cost is value of forgone opportunities, best alternative opportunity. Implicit - not an outlay of money: 4-14 reader. A demanders consumer surplus from purchasing unit of some goods is defined to be difference between: his buyer value and price of good. Average price is accurate because errors cancel out on both sides of spectrum. Need to simplify , capture key things as well. Test theory through how well it predicts outcomes. Theory can"t be tailored to one particular problem.

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