Problem of the Day
Assume that the market for cigarettes is composed of two groups: those who are addicted to cigarettes and those who are not yet. Now assume that the the government permanently raises the price of cigarettes.
Draw a diagram illustrating the effect of the increase in price in the market for addicted smokers.
Draw another diagram illustrating the effect of the increase in price in the market for non-addicted smokers.
Explain why the outcome in each market is different.
Comparative Advantage: This is the final topic we will cover before the unit test.
Review: We will do a practice FRQ, if we have time.