COMMERCE 1BA3 Lecture Notes - Lecture 3: Absolute Advantage, Comparative Advantage, Opportunity Cost
7 May 2016
School
Department
Course
Professor
Document Summary
Chapter 3 interdependence and the gains from trade. Today we rely on a variety of goods produced in countries all over the world that trade with canada. People provide consumers with the goods and services they produce because they get something in return. To understand why people choose to depend on others for goods and services, look at a simple economy: two goods- meat and potatoeso, two people- cattle rancher and potato farmer. Both members of the economy can produce both goods, but not equally well: cattle rancher"s land may not be fertile enough to make quality potatoes, potato farmer not good at raising cattle properly. Each person spends a different amount of time producing each good: If the farmer and rancher are self-sufficient and don"t trade, they consume the amount they produce, and would likely produce a combination of both products.
