ECO 1104 Lecture Notes - Lecture 5: Absolute Advantage, Comparative Advantage, Negative Number

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: David Gray

Document Summary

For any elasticity trigger in the denominator, the response in the numerator. Whether the ped is elastic or inelastic the law of demand still holds. The relationship between price elasticity in demand and tr. Know ped-related to tr (dw about the rectangle graph thing) If it is positive it is a substitute. Put ped in a negative number and put it as an absolute value. Read the article too i guess :( 1-12, 16, 17. Absolute advantage shows productivity (whichever country has the absolute advantage is the richer country) Comparative advantage gives the pattern of specialization and the pattern of trade. Do not expand to production possibilities frontier, the model of comparative advantage does not expand ppf instead we can consume what is beyond our own ppf (?) Does not shift out, what changes are our consumption possibilities which expands. Basic idea slide is the cause of gains from trade. Constant sloped are not realistic and should be negative.