ECON 1B03 Lecture Notes - Lecture 2: Absolute Advantage, Capital Good, Tim Hortons

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Econ1b03 lecture 2: comparative advantage and gains from trade. Want to specialize, produce certain goods, etc. Economists typically give positive if a happens, b will happen. Pass this to policy makers, who create normative statements: maybe we should do this, knowing the positive statement. Normative: opinion or value judgement, that people could disagree with and be right. What you give up in order to get something else. Accountant: what do you give up to go to university: tuition, books, auxiliary fees, etc. Anything you can pay is anything you can get a receipt for. Economist: you probably gave up ,000 from job at tim hortons: an alternative that you"ve given up. When talking about opportunity costs and production, not talking about money: the amount of one good we need to give up to get another good. Question 2 canadian and american production of corn and potatoes. Production possibilities for canada and the united states.

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