Welcome to Econ 1. Introduction to Microeconomics Week 2.2, Tuesday, February 15. Review: Definitions. Good : is anything that an individual wants to have more of, at zero price. Resource : Anything that can be used to produce goods.
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Introduction to Microeconomics
Week 2.2, Tuesday, February 15
Good : is anything that an individual wants to have more of, at zero price.
Resource: Anything that can be used to produce goods.
Scarcity: A good is scarce if the amount desired at zero price is more than the amount available at zero price.
(Scarce good = Economic Good)
Role of Money: The medium of exchange
Crusoe: 8 F = 8 C 1 F = 1C and 1C = 1F
Friday: 10 F = 20 C 1 F = 2C and 1C = ½ F
Thus Crusoe has a comparative advantage in the production of fish ( 1F = 1C) and Friday has a comparative advantage in the production of Coconuts
( 1C = ½ F)
1. Fixed resources: 10 acres in rows.
2. Fixed technology: current knowledge of how to produce.
3. Resources vary in relative productive ability.