ECON-2110 Lecture Notes - Lecture 4: Chipotle, Absolute Advantage, Comparative Advantage
1 Sep 2016
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Document Summary
Individuals are different from each other different skills, backgrounds, training. Some people are born with special talents/abilities that allow them to specialize and capitalize on these talents. People work together to produce everyday used products because it is in their interest to produce these products (the invisible hand) System is too complicated to be coordinated by any individual or institution. Hyatt (economist) some people wanted to run the economy by using statistical techniques, he understood that this was impossible due to the complexity of the economy. More developed country specializes in high tech and service goods. Individuals are able to specialize due to trade. Example if you lived on a desert island you would have to produce everything you consumed. When you specialize in one labor/product you are able to earn an income that allows you to purchase the products of many labors. Specialization increases the quality, quantity, and variety of the goods in our markets.
