1. To say that someone needs a good is to suggest that he cannot choose to do without the good or buy a substitute for it. We are more likely to be mindful of the fact that almost all goods have substitutes if we speak of wants rather than needs 2. Even though we cannot actually

1. Price changes affect quantity demanded for two reasons: They attractiveness of substitute goods and they alter the real value of the consumers purchasing power. The second effect grows larger as the share of the consumers

Chapter 3 introduces markets and provides an overview of the supply and demand model. It begins by comparing central planning and the market as alternative methods of allocating resources Chapter 3-Supply and Demand: An Introduction Slide 3

Multiple Choice If one person can perform a task in fewer hours than another, you know the person has in performing the task. a. an absolute advantage. b. a comparative advantage. C. both a comparative advantage and an absolute advantage. rd. neither an absolute nor a comparativ advantage

An individual has a comparative advantage in the production of a particular good if she can produce it at a lower opportunity cost than other individuals. An individual has an absolute advantage in the production of a good if she can produce more of that good than another individual. using comparable amounts of time. raw materials and effort

Answers to Review Questions 1. Your friend probably means that your tennis game will improve faster if you take solo private lessons instead of group lessons. But private lessons are also more costly than group lessons. So those people who don' t care that much about ho rapidly they improve may do better to take group lessons and spend what they save on other things

Actual Structural and Cyclical Budget Deficits Government Debt Displaceste Capital T-260

Inflation Is a Fundamental Constraint on Economic Policy

EC并NOM|CS U.S. Net Exports Turned Sharply Negative in 1980S

ECSNOMICS Incomes and Human Development Are Linked. but Some Countries do better for Their Income levels