ECON 2030 Chapter : ECON Chapter 2
Document Summary
Chapter 2, appendix a: 1-3, 5, 8 (graphing) You can get more of something only by giving up something else. Portugal has the absolute advantage in producing wine. Portugal has the comparative advantage in producing wine. England: 50 worker/hours wine + 50 worker/hours cloth=100 worker/hours. Suppose: portugal trades 175 wine to england for 875 cloth. What is now consumed in the two countries: equally efficient along the ppf, after this trade , portugal has 325 wine and 875 cloth from england, england has 175 wine from portugal and 925 cloth. Winners from trade (why?: portuguese wine producers and workers, portuguese cloth consumers, english cloth producers and workers, english wine consumers. Losers from trade (why?: english wine producers and workers, english cloth consumers, portuguese cloth producers and workers, portuguese wine consumers, only looking at producers; not looking at the for whom .
