ECON 1116 Lecture Notes - Lecture 20: Absolute Advantage, Comparative Advantage, Opportunity Cost
14 May 2016
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Understand ppc curve (general it is a straight line,; resources are perfectly shift able. In reality it is concave; reason why we don"t see complete specialization of cornerstone solutions. As opportunity cost increase; no longer have a comparative advantage. Gains from trade are derived from specialization. What are the barriers of trade: want diversification, may be labor issues, want to protect local businesses, protect new industry. What are barriers of trade: tariffs (know direct impact; lower imports, more tax revenue, etc indirect impact other countries income might be lower etc, quotas, embargos, regulations. If the world price is lower than the domestic price.
