ECON 2010 Lecture 6: September 4
46
ECON 2010 Full Course Notes
Verified Note
46 documents
Document Summary
Trade and advantage: review, opportunity costs of producing one good over another is represented by the slope of a ppf, economic agents specialize in producing certain goods, as the ppf is bowed out, the opportunity cost of a good increases as more of the good is produced, comparative & absolute advantage, opportunity cots of producing one good over another a represented by the slope of a ppf, economic agents specialize in producing goods that are low cost, through specialization and trade agents are able to consume more than they otherwise would have on their own. Basic trade lessons: absolute advantage is not necessary for comparative advantage, gains from trade arise from comparative advantage (differences in opportunity costs, when each country specializes in the goods in which it has a comparative advantage, total production in all countries higher, the world" economic pie is bigger, and all countries can gain from trade, this applies to all economic, how trade occurs.
