ECON 1011 Lecture Notes - Lecture 3: Opportunity Cost, Comparative Advantage

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12 Sep 2018
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Idea that there are two countries, and that they are going to trade. No trade > do not capitalize on comparative advantage, no specialization will happen. If trade, then specialize in products that they have ca in. Can extrapolate how much gains from trade a country might have using economics and with more info. Valuation of bb = no greater than 2 dd, no less than 1dd. (fred"s opp cost for bb = 1dd, barney"s opp cost for bb = 2dd) If valuation does not fall between those numbers, there will be no trade. Valuation of product = constrained by each agent"s ability to produce the product. The more an economy focuses on manufacturing of one good, the higher and higher the opportunity cost becomes. Reflects increasing opportunity cost more realistically, not straight line. Countries will not implement technologies that reduce ppf. Change in technology from barney tech > bamm bamm tech.

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