ECON 1000 Study Guide - Final Guide: Externality, Unit, Social Cost

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10 Jul 2014
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Graph that shows 2 goods the econmy can produce. Combinations along the frontier are efficient- use all factors of production available. Moving from point a to b = 20 less from a and 8 more for b = 20/8. Improvement in all of economy shifts both sides of ppf. Produce more of a good with the same resources. Both increase because of more capital, more labour, or tech breakthrough. Below market equillbirum=binding= quantity supplied short of quantity demanded=shortage. Technological advances reduce the cost of production for computers, decline in input price shifts supply. Lower input prices= supply shifts to right=increase= cheaper to. Outcome= the price falls and the quantity rises (cheaper product=lower price=more customers) Increase in quantity of comps sold=increase demand of software. Impact on market for typewriters? (comps=substitute for typewriters) Demand for typewriters fall= demand to left= decline in price and. Medicnal drugs have an inelastic demand, computers have elastic demand.

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