ECON 101 Lecture Notes - Lecture 9: Comparative Advantage, Opportunity Cost, Absolute Advantage

• School: U of M
• Department: Economics
• Course: ECON 101
• Professor: Ronald C Caldwell

Document Summary

We observe the people tend to specialize, particularly in large industrialized societies. People tend to focus on a few things, not everything. At the heart of why we choose to specialize and why this makes us better off. Some can produce things at a lower cost than others. What must be given up in order to consume or produce more of a good. The (opportunity) cost of producing an additional (incremental) unit of a good. When one producer can produce more of a good than another producer in a. When one producer can produce a good at a lower opportunity cost than another. Concentrating one"s efforts in a specific activity or field. Represents the possible combinations of goods that an economy or individual can produce in a certain period of time. Part 1: simple 2 person (a,b), 2 good economy (fish apples) In a given day can produce 6 fish or 6 apples or some linear combo of the two.