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Chapter 3-4

Chapter 3-4 The Principles of Economics.docx

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Department
Economics
Course
ECO100Y1
Professor
James Pesando
Semester
Fall

Description
ECO100-Pesando-textbooknotes created by Lavender Y. Week 2-3: required readings chapter 3,4 Chapter 3 Interdependence and The Gains From Trade - Absolute Advantage: productivity (smaller inputs to produce a good) - Comparative Advantage: smaller opportunity cost  Impossible for one person tp have a comparative advantages in both goods  Producing goods (comparative advantage) --- total production rises  Individuals benefit from trade by obtaining a good at price that lower than the opportunity cost Chapter 4 The Market Forces of Supply and Demand - Market:  Def: a group of buyers and sellers of a particular good/service  Competitive market: there are so many buyers and seller that each has a negligible impact on the market price - Perfectly Competitive: 1. Identical goods 2. (Price takers) Numerous sellers / buyers with no influence over the market price, (e.g. wheat market) - Monopoly 1. One seller (e.g. local cable television) - Demand  The demand curve: relationship between price and quantity demanded  Quantity demanded: amount of good that buyers are willing to
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