ECON 1B03 Study Guide - Final Guide: Perfect Competition, Budget Constraint, Absolute Advantage
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ECON 1B03 Full Course Notes
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Production possibilities frontier (ppf): it shows the best an economy can do if it uses all its resources efficiently, given the current technology. Opportunity cost: what must be given up to obtain some item. Comparative advantage: somebody who can produce an item at a lower opportunity cost than somebody else is said to have a comparative advantage. Absolute advantage: a producer that requires a smaller amount of inputs to produce a good is said to have an absolute advantage. Elasticity: is the measure of how much buyers and sellers respond to changes in market conditions. It is also the response of qs or qd in relation to price. Price elasticity of demand: a measure of how much the quantity demanded of a good responds to a change in the price of that good. It is the percent change in qd given a certain percent change in price.