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UB ECO 182 - 2. Scarcity,_Opp_Cost,_Specialization_&_Trade

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Slide 1Scarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostScarcity & Economic CostExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsExercises on Opportunity CostsEconomic ProfitEconomic ProfitEconomic ProfitEconomic ProfitEconomic ProfitEconomic ProfitExercises on Economic ProfitExercises on Economic ProfitExercises on Economic ProfitExercises on Economic ProfitExercises on Economic ProfitExercises on Economic ProfitExercises on Economic ProfitAn Individual’s Production Possibilities.Slide 45Slide 46Slide 47Slide 48Slide 49Slide 50Slide 51Slide 52An Individual’s Production Possibilities.Slide 54Slide 55Slide 56Slide 57Slide 58Slide 59Slide 60Opportunity Costs of ProductionSlide 62Slide 63Slide 64Slide 65Opportunity Costs of ProductionSlide 67Slide 68Exercises on Opportunity Costs of ProductionSlide 70Slide 71Slide 72Slide 73Slide 74Exercises on Prod. Possibilities & Opp. Costs of ProductionExercises on Prod. Possibilities & Opp. Costs of ProductionExercises on Prod. Possibilities & Opp. Costs of ProductionComparing Opportunity Costs of Production.Slide 79Slide 80Slide 81Slide 82Slide 83Slide 84Comparing Opportunity Costs of Production.Comparing Opportunity Costs of Production.Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Slide 91Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Slide 94Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Slide 97Slide 98Slide 99Slide 100Gains from Specialization and Free Trade.Slide 102Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Slide 105Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Slide 108Slide 109Slide 110Slide 111Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Gains from Specialization and Free Trade.Exercises on Comparative Advantage.Slide 120Exercises on Comparative Advantage.Slide 122Exercises on Comparative Advantage.Exercises on Comparative Advantage.Exercises on Comparative Advantage.Exercises on Comparative Advantage.Exercises on Comparative Advantage.Slide 128Exercises on Comparative Advantage.Exercises on Comparative Advantage.Exercises on Comparative Advantage.Exercises on Comparative Advantage.Exercises on Comparative Advantage.Exercises on Comparative Advantage.Specialization & Income Maximization.Specialization & Income Maximization.Slide 137Slide 138Slide 139Slide 140Slide 141Slide 142Slide 143Slide 144Slide 145Slide 146Slide 147Slide 148Slide 149Slide 150Specialization & Income Maximization.What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?What Terms-of-Trade Ensure Mutual Gains from Trade?Exercises on Terms-of-Trade.Exercises on Terms-of-Trade.Exercises on Terms-of-Trade.Exercises on Terms-of-Trade.Exercises on Terms-of-Trade.Exercises on Terms-of-Trade.Exercises on Terms-of-Trade.Exercises on Terms-of-Trade.Exercises on Terms-of-Trade.Scarcity, Opportunity Cost, Specialization & Trade.Lecture Note Set 2Scarcity & Economic CostSCARCITY; the reason for economy.A resource or a commodity is scarce if, at a price of zero, the total quantity demanded exceeds the total quantity supplied.If a commodity is scarce then its market price will be positive.A commodity is not scarce only if its market price is zero or negative.Scarcity & Economic CostResources are scarce.Scarcity & Economic CostResources are scarce.You “rationally” choose your use of a scarce resource.Scarcity & Economic CostResources are scarce.You “rationally” choose your use of a scarce resource.But at the cost of giving up your next most preferred use of that resource.Scarcity & Economic CostResources are scarce.You “rationally” choose your use of a scarce resource.But at the cost of giving up your next most preferred use of that resource.That is the opportunity cost of your rational choice.Scarcity & Economic CostE.g. an acre of land can be used either for growing wheat and for grazing cattle, but not both.If you graze cattle then you forgo ??If you grow wheat then you forgo ??Scarcity & Economic CostE.g. an acre of land can be used either for growing wheat and for grazing cattle, but not both.If you graze cattle then you forgo the value of growing wheat.If you grow wheat then you forgo ??Scarcity & Economic CostE.g. an acre of land can be used either for growing wheat and for grazing cattle, but not both.If you graze cattle then you forgo the value of growing wheat.If you grow wheat then you forgo the value of grazing cattle.Scarcity & Economic CostThe value of grazing cattle is $1,200. The value of growing wheat is $1,000.The opportunity cost of grazing cattle is $??The opportunity cost of growing wheat is $??Scarcity & Economic CostThe value of grazing cattle is $1,200. The value of growing wheat is $1,000.The opportunity cost of grazing cattle is $1,000.The


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