ECON 1000 Lecture Notes - Lecture 4: Autarky
8 May 2017
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Econ 1000 week 2 lecture 4. David ricardo"s difficult idea and comparative advantage: free trade generally always benefits everyone. Opportunity costs of producing different goods means you lose a certain amount of any product just for producing something else. That is why we trade, to make up for the opportunity cost: autarky (no trade) If you want to consume it, you need to produce it. When you trade you can change your production and consumption rates, in a free market that trades production and consumption are two very different things. Supply and demand rarely equal each other. Prices generally dictate how countries trade and what they trade. Profit can be made from international trade, because prices between countries for goods vary depending on supply and demand. Possible profits give incentive on people to trade, thus competition becomes a very popular thing. As more competition increases so does demand for the goods being traded.
