ECON 423 Lecture Notes - Lecture 5: Pareto Efficiency, Diminishing Returns, Production Function
17 Jan 2018
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Introduction: ricardian gives us some insights, but too many limitations, emphasis of uneven distribution of trade benefits (fop are unevenly distributed/immobile, some people lose from trade. Intro (3: from textbook: steel and tires: concentrated in ohio, key swing state politically (gain political momentum, win ohio: win presidential election, fundamental work now: how trade/globalization has contributed to polarization of. Intro (5: pareto efficiency: italian economist, sociologist: appropriation (stealing of goods, sometimes, policy to influence so that income will go to you. Idea: in ricardian model: the ppf is a straight line. In this model, the ppf is not a straight line: output of cloth vs. output of food, ppf curves downwards, assume because of diminishing returns, ppf is not a straight line, it"s curved. What if not 50/50 split: 30/70 split, read off table of numbers and go through same process between graphs to construct points along the ppf. Possible exam question: given different numbers - draw the graph.
