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-

u
Micro Economics
Chapter 3

"Trade can make everyone better off


Production possibilities frontier
-

Absolute advantage with fewer


potatoes Amountof Amount
&mins !mins *
is
of : is

-
meat
! los the tuyet da)
Frank 60mins 15mins 8 ounces 32 ounces
Meat- Ruby
3 both Frank
-

Y
Ruby
:
20mins 10mins 24 ounces 48 ounces
-
Potatoes -

Ruby

*
Comparative advantage (la the twong do) : atopportunity cost
a lower
Meat Ruby One producer -

comp adu /1ng-1 la


.
the ve 1 man)
Frank
Potatoes good I
-

one

Trus hop · trei


Mr A+ abs adv meat-comp adi ->
97
* . .
: ,

* Mr B + abs .
adv potatoes comp.ad
·
-
->
phas"Iam bang I

nu
I 2ng I nhau ed Abs adv the .

comp .
do Ir si
G long
nhan

Meat
Meat 1

I
24
g trade
A
hi)
no

trade the do B

.....
~

(l
nig daj
no

Frank CI Ruby

Bri i
p . . . . . . ①
... -
A
O
·
-

Potators Potatoes
g 16
32
> g 48)
Normal Frank 1h 1m=4p 19/3m
: Im
Ruby 3m =

Gp 1p=1am
·
4p
1p =
1m em =
2p
Trade 1m
: =
3p => 4m =

With trade Frank sap Ruby 21m 20m (24-4)


Im (32-12)p
: :

12p
Frank 4m

Specialization : Frank 32P :


Dim A 16p
21m

Ruby : 24m
Ruby 20m
24p
16p
Example 2:

wheat, wheat
3 000

.....--------
,

US Japan
---------
600
2,000

160
250 500 computers 120 240 computers
5000w = 500 1200 w = 240e

Ic = low 1 = 5u
1 =
10 a 1 =
152
No teade :
US 2500 w

2502 3100 w

JP Goo 970C
1200

Specialization 160 a
&
: us -> 3400 w +
3400W

JP -> 240c 400c

/3400 w
50 000
.
+ 3400w - 34000hrs

16000 Mrs + 160C

Trade : 700m f 1102


Us <700w JP 700w
2700 130c

Comparative advantage (la the twong do


US-wheat
JP-computers
Table 1 A Production Function and Total Cost:
Caroline’s Cookie Factory
(1) (2) (3) (4) (5) (6)
Number of Output Marginal Cost of Cost of Total Cost of
Workers (quantity of Product of Factory Workers Inputs (cost
cookies Labor of factory
produced per plus cost of
hour) workers)

0 0 Empty cell $30 $0 $30

1 50 50 30 10 40

2 90 40 30 20 50

3 120 30 30 30 60

4 140 20 30 40 70

5 150 10 30 50 80

6 155 5 30 60 90

© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning 10
management system for classroom use.
Table 2 The Various Measures of Cost: Conrad’s Coffee Shop

(1) (2) (3) (4) (5) (6) (7) (8)


Output Total Fixed Cost Variable Average Average Average Marginal
(cups of Cost Cost Fixed Variable Total Cost
coffee per Cost Cost Cost
hour)
0 $3.00 $3.00 $0.00 Empty cell Empty cell Empty cell Empty cell

1 3.30 3.00 0.30 $3.00 $0.30 $3.30 $0.30

2 3.80 3.00 0.80 1.50 0.40 1.90 0.50

3 4.50 3.00 1.50 1.00 0.50 1.50 0.70

4 5.40 3.00 2.40 0.75 0.60 1.35 0.90

5 6.50 3.00 3.50 0.60 0.70 1.30 1.10

6 7.80 3.00 4.80 0.50 0.80 1.30 1.30

7 9.30 3.00 6.30 0.43 0.90 1.33 1.50

8 11.00 3.00 8.00 0.38 1.00 1.38 1.70

9 12.90 3.00 9.90 0.33 1.10 1.43 1.90

10 15.00 3.00 12.00 0.30 1.20 1.50 2.10

© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part, except for use
as permitted in a license distributed with a certain product or service or otherwise on a password-protected website or school-approved learning 16
management system for classroom use.
Macro Economics
CHAPTER26

FinancialInstrument stock onlybigcompany can issuebondtopay


bond notwillingtobuy borrowmom
i'out bank

y bonds
fifth
Financialmarket
bonds
u
Surplusof FINANCIAL shortageofSt
Savers Investment
Lenders paper
Saving Investment
Indirect Finance
S FinancialIntermediaries
moreexpensiveto borrow
Banks
STOCK mutualfunds for not a lot ofmoney
if
equity
holders owners of firm Nah lack of expertise

L
issuer dividend diversification
capitalgains losses chargeservicefee

Primarymarket first time sell stocksto thepublic initial publicoffering IPO


n
determinetheprice for secondarymarket
Secondarymarket pplbuyandselltheissuedstocksfromotherinvestors
increaseliquidity makepplbuymore
whatinvestorthink about yourcompany
g
Paylenderfirst paystockholders later
BOND debt
holders lenders
issuers paycoupon 9 f Maturity
1.000
Facevalue important
what we receiveafter
thebondexpired
Corporates bond bondsissue bycorporate higherinterest rate to attract
Treasurybond government issue bonds safer than corporate
Municipalbond localgovernment issuebonds notrequire topayfederalincometax
USonly
short term shortmaturity credit risk

Long term longmaturity highrig


higherinterest rate

Intro to thestockmarket https://youtu.be/QcgRoq_tqec?si=gXncuUnK0-MWBQ_O


Intro tothebondmarket https://youtu.be/O7ww0gQwuhI?si=hslAg9f01UXHXHFZ

Closedeconomy netexport NX 0
Y Ct It G
I Y C GG
a
tax
i
Y C G SC2
1 2 S I
T G O surplus
Gov O defi it borrow
Budget issue T bond

1 Market for loanablefunds


interest s
real rt sp
rate ri It

rn S I

Qm
Savingincentives St rt IT
rn so

soft
I In

Io
Investment incentives
rn so

I so I In rt ST

foQm
Budgetdeficit T G O
rn s public sus sd
rt It
I Crowdingout effect
do

I
3
CHAPTER 28
What is unemployment Unemployed
unemployed rate
Employment Labourforce

Unemployment labour Labourforce Labourforce


activelylooking force Participation rate Adultpopulation
for jobs
Not inthelabour
force fulltime students
notactivelylooking homemakers
for jobs retirees

Adultpopulation

U rate increase
U rate not change
U rate not change

types
Cyclical U
businesscycle
Recession tap Chap35hoc

y a short time
is agoodthing Findsuitablejobs
jobsearcher
Natural U changeindemandlabour
average sectoral shift

structural U insufficientjob
Wages Wages
Minimumwagepolicy
I government
wage
surplusof
Unions labour
Efficiencywage Qp Q
75 u
Micro
Macro

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