CAS EC 101 Lecture Notes - Lecture 2: Comparative Advantage, 2 Guns, Absolute Advantage

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Saponara

Document Summary

Andy busey ec 101 notes 2: economic models; comparative advantage may 2015: economic models. Economists use models, abstract representations of reality, to help understand the world. These models take very complicated real world situations (e. g. , the decisions of every american whether or not to buy a burrito for lunch) and make assumptions about which real world details are actually relevant and which can be ignored. The idea is to make a model as simple as possible while still being able to accomplish its purpose. As an analogy, imagine using google maps to nd directions from one point to another. Your ability to zoom in in the map depends on the distance between the two points: you could zoom in very closely for directions between. Many students dislike some of the models used in economics because they are un- realistic : they make too many assumptions and seem too detached from reality.