EC120 Study Guide - Midterm Guide: Sunk Costs, Invisible Hand, Opportunity Cost
30
EC120 Full Course Notes
Verified Note
30 documents
Document Summary
Every good is made of land, labor and capital. Opportunity cost: include explicit costs (out of pocket expense) and implicit cost ( Do not include sunk cost (unrecoverable cost) The law of the demising and return. If both sides change value, the opportunity cost stays the same. Chapter 3 interdependence and the gains from trade. Comparative advantage: the ability to produce a good at a lower opportunity cost than another producer. Never produce both goods when you trade. Draw table or diagram when you do the exam. What is the relative price??? ( it"s always between the two original numbers) Put what you look for on the bottom a/b. It"s a flow not a stock of goods. A market is the collection of buyers and sellers of a good or service. Competitive markets require a large quantity of sellers and buyers. The lower of the price the more of a good i will buy.
