CAS EC 101 Lecture Notes - Lecture 4: Negotiation Theory, Corn Laws, Absolute Advantage

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

Document Summary

Production strained by ppf, can"t consume outside of ppf. By reallocating time they can consume outside of ppf. Takes less time to make potatoes/ meat. Agriculture interest dominated parliament and set tariffs (tax on imports)- makes corn less attractive) on european corn. Ricardo thought corn laws were bad idea, brought up theories of models that showed it would be a bad idea. Benefits emanate from not absolute levels of productivity but rather relative levels. Frank oc: for 1 oz of meat, oc is 4 oz of potatoes, for 1 oz potatoes oc is meat. Frank- only costs him meat for 1 oz potatoes. Whereas rose is cost oz of meat for 1 oz potatoes. Focus production on what you can do relatively better than another person. If individuals focus on what they can do with lower oc and sell those goods then world economic pie gets bigger.