ECON 160 Lecture Notes - Lecture 3: Spinning Jenny, Industrial Revolution, Absolute Advantage
26 Jan 2017
School
Department
Course
Professor
Document Summary
Econ 160 lecture 3 ricardian model. Graphical representation of economy wide opportunity cost. During industrial revolution, there were three main parts. Previously one thread on a machine. Industrial revolution one man, 300 spindles. Labor is the constraint of the british economy. If you use all your labor on one product, it"s specializing, and you use no labor for other things. The limit of what can be made, straight line because there"s a constant level of input and outputs portugal. In order to make one unit of wine, we need to take 9 laborers from cloth. Every unit of wine requires 8 laborers. The cost of making wine is 8/9th units of cloth per unit of wine. Opportunity cost of making cloth is 9/8th units of wine. The limit of what we can produce. Negative slope because we"re falling downward sloping. If we run 90 units, we fall 80 units (-80/90) for portugal. England we run 100, fall 120 (-120/100)
