Class Notes (835,629)
Canada (509,297)
Economics (490)
ECON 105 (187)
Lecture 9

Lecture 9 - Development and Trade

4 Pages
88 Views
Unlock Document

Department
Economics
Course
ECON 105
Professor
Eldar Sehic
Semester
Summer

Description
Trade Opportunity Cost (OC): What must be sacrificed for extra production OC = What you lose/what you get Increasing OC: OC rises with extra production Example: C 10 8 5 0 1 2 3 T Constant OC: OC stays the same with extra production C 10 8 6 4 2 0 1 2 3 4 5 T Absolute Advantage (AA): Who can produce more Comparative Advantage (CA): Who can produce at lower OC Specialization: Based on CA Price for Trade: Found between opportunity costs for some good Example: Imagine 2 countries (X and Y) that can produce food (F) and clothing. X can make 12 F or 4 C. Y can make 10 F or 2 C. Country F C OC(F) OC(C) X 12 (or) 4 4/12 = 1/3C 12/4 = 3F Y 10 (or) 2 2/10 = 1/5C 10/2 = 5F Absolute Advantage (AA): X has AA in F (12 > 10) X has AA in C (4 > 2) Comparative Advantage (CA): Y has CA in F (1/5 < 1/3) X has CA in C (3 < 5) Specialization: Y specializes in F (making 10 food and 0 clothing) X specializes in C (making 0 food and 4 clothing) Price for Trade: Between 1C = 3F and 1C = 5F Such as: 1C = 4F Suppose, instead of trad
More Less

Related notes for ECON 105

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit