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ECON 120: Wednesday 11/20 Lecture Notes

ECON 120
Wednesday, November 20, 2019
Lecture Notes

MB > MC, Quantity Increases
  • Demanders as a group may gain or lose.
  • Business loses as a group (Producer Surplus falls)

Theorem: An effective price ceiling on its product is ALWAYS bad for business.
An effective price ceiling is bad for the overall economy because total surplus (TS) decreases.

Businesses are hit with higher price for one of its inputs (unskilled labor).
Minimum wage or higher minimum wage is NEVER good for business.
Price of Input INCREASES -> Cost INCREASES

If the price of unskilled labor INCREASES, substitute with:
- hire more skilled workers
- use more computer
- AI (Artificial Intelligence)
- robots
- other inputs
- better technology

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