ECN 191 Lecture Notes - Lecture 3: Barter, Human Capital, Bulldozer
Document Summary
More goods (or leisure(, more people, get stronger - specialize & trade. Specialization gives you access to wealth that is created. Just because one is wealthier than the other doesn"t meanyou can"t gain more by trading. Person 2 gets better as a fisherman, bottle with fishing instruction - can now catch 300 fish a month - person 2 better off, person 1 is potentially better off. Now person 2, 1 banana cost you 3 fish - by getting better at fishing, you get worse at getting bananas, comparatively (cost is 3) Person"s cost of getting banana is now 1/3 instead of 1/2 before - better banana gatherer compared to other. Now, person 1 can ask for 2 1/2 fish for 1 banana. ^ competition, getting better, competing amongst each other to sell at a lower price. Or borrow, if don"t want to save, resources from person 2. Must save, cannot produce capital good without saving consumption good.
