ECON-101 Lecture Notes - Lecture 3: Comparative Advantage, Opportunity Cost, Absolute Advantage
Document Summary
Econ 101 - interdependence and the gains from trade chapter 3. One of the ten principles of economics highlighted in chapter 1 is that trade can make everyone better off. This principle explains why people trade with their neighbours and why nations trade with other nations. Imagine that in the world there are: two goods meat and potatoes and two people a cattle rancher and a potato farmer each of whom would like to eat both meat and potatoes. It is easy to see that trade would allow them to enjoy greater variety. Productivity table minutes needed to produce 1 kg of. Even though 1 person is better at producing both goods does not mean trade isn"t beneficial. Productivity table amount (either meat or potato) produced in an hour. Rancher is still more capable relative to farmer at producing both. Productivity table amount of meat of potatoes produced in an 8-hour day.
