1. Bell ringer
What is the difference between comparative advantage and absolute advantage?

2. Production Possibilities Table
Lira
20 hotdogs
0 hotdogs buns
10 hotdogs
20 hotdog buns
0 hotdogs
40 hotdog buns
Mark
40 hotdogs
0 hotdog buns
30 hotdog buns
60 hotdog buns
1. Who has the absolute advantage in the production of hotdogs?
2. Who has the absolute advantage in the production of hotdog buns?
3. Who has the comparative advantage in the production of hotdogs?
4. Who has the comparative advantage in the production of hotdog buns?
5. Who should specialize in the production of hotdogs? Why?
6. Who should specialize in the production of hotdog buns? Why?
7. Will Lira and Mark benefit from trade?

3. Production Possibilities Table
George
2 Mustard
0 Relish
1 Mustard
2 Relish
0 Mustard
4 Relish
Susan
3 Mustard
1.5 Mustard
6 Relish
12 Relish
8. Who has the absolute advantage in the production of mustard?
9. Who has the absolute advantage in the production of relish?
10. Who has the comparative advantage in the production of mustard?
11. Who has the comparative advantage in the production of relish?
12. Who should specialize in the production of mustard? Why?
13. Who should specialize in the production of relish? Why?
14. Will Susan and George benefit from trade?

4. Supply and Demand

5. in a free market the relationship between the demand for an item and its supply will influence its price. changes in the price of a good or service can also affect demand and supply.

6. How are demand and supply curves derived
A demand curve shows the relationship between price and quantity that buyers are able and willing to buy.
As the price changes, the quantity demanded moves up and down the demand curve.
A supply curve, on the other hand, shows the relationship between the price and the quantity that producers are willing and able to supply.

7. How can one find out what the demand for a product would be?
One can give surveys.
One can look at market data from previous studies.
You should determine how much of a demand there will be for a product at different prices.
In general, when the price for a product goes up, people will demand less of that product.
Conversely, if the price for that product should go down, people will want to buy more of it.

8. What are the determinants of demand?
Market price
Consumer income
Prices of related goods
Tastes
Expectations

9. a demand schedule can be put together that shows how much of a good or service will be purchased at different prices.

10. The demand schedule and the graph of the demand curve are just different ways of presenting the same information.

11. The law of demand
The law of demand states that there is an inverse relationship between price and quantity demanded.
*** Inverse relationship: A relationship between two numbers in which an increase in the value of one number results in a decrease in the value of the other number.

12. One can also establish a supply schedule based on how much of a good or service will be offered at differing prices

14. Market equilibrium is when the supply of the product equals the demand of the product. The market for a product will move towards equilibrium over time.
Equilibrium can be shown on a graph. It is where the supply and the demand curves intersect.

15. Prices do not remain constant.
Producers and consumers do not always make decisions that are in keeping with market conditions. Producers sometimes produce a surplus or shortage.
Instead of equilibrium, we have disequilibrium.

16. As prices change, supply of a good or service will usually change also.

17. What are the determinants of supply

18. determinants of supply
Price is often the main factor but not always; sometimes even if price remains unchanged, other things will cause the supply of a good or service to change
Change in supply
Determinants of Supply – forces that will cause the entire supply curve to shift either left or right (producers will produce even though the price of the product has not changed.)

19. Movement along the supply curve
A change in price will not cause the supply curve to change; quantity will be affected but not the curve itself.
The only change will be along the supply curve. (See, for example, how in the diagram below change in price will cause the supply of a good or service to decrease.)

20. Demand shifters
Income - If people have more money, the demand for products can increase.
Population - As the population increases, there are more buyers. This will increase demand.
Customer preference - Customers may no longer want a product, reducing the demand.
Changes in competition - If the competitors of a product increase their price, then the demand for your product may increase.

21. Supply shifters
Number of sellers - If the number of sellers increases, then the supply will increase.
Technology - Improvements in manufacturing can increase supply.
Resources - If resources needed to build a product are moved to another product, then supply will decrease.
Costs of manufacturing - If the costs for making a product increase, the supply will decrease