Econ 110 week 2 notes
Econ 110 week 2 notes Econ 110
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This 2 page Class Notes was uploaded by Sydney Clark on Saturday September 10, 2016. The Class Notes belongs to Econ 110 at Brigham Young University taught by Kearl in Winter 2016. Since its upload, it has received 36 views.
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Date Created: 09/10/16
Econ Notes Week 2 *Important* Assume that more is ALWAYS preferred than less. o Preference provides everyone with a win Trade has an invisible hand Middle Man, intermediary o One who brings nothing to the table yet trades to get something Time has opportunity cost The fact that every individual brings something different to the table is what promotes beneficial trading. Choices in economy Ricardian economy o How much to work? Leisure labor choices Hours per week/month/year Opportunity cost for leisure how much you COULD’VE made o What to produce? Production Possibility Frontier (PPF) o Represents the economy at maximum efficiency o Specializing in ‘B’ because you can buy ‘A’ cheaper than producing. Opportunity cost is price to trade o Specializing in ‘A’ would be beneficial because ‘B’ is cheaper to buy than produce. Comparative advantage o Trade with different people from you o Specializes in different products o Major has to do with skills and social normalcy o You don’t have to be the best, you just have to be different Assume 3way economy is ruled by benevolent dictator Doesn’t have continual cost Cost becomes increasingly more expensive as you produce more of something. Law of increasing relative cost o What determines distance (“?”) 1.) Labor and labor choices 2.) Natural resources 3.) Capital and human capital 4.) technology Prices and selfinterested people create an efficient economy
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