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Lecture 16

ECON 1010 Lecture 16: Lecture 16

3 Pages

Course Code
ECON 1010
Laura K.Brown

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o982 1. If people choose to be self-sufficient instead of trading with one another, then each consumes exactly what they produce 2. In this case, the production possibilities frontier is also the consumption possibilities frontier Comparative Advantage: The Driving Force of Specialization: Absolute Advantage: 1. Absolute advantage: the comparison among producers of a goods according to their productivity 2. The producer that requires a smaller quantity of inputs to produce a goods is said to have an absolute advantage in producing that good Opportunity cost and Comparative Advantage: 1. Compare the opportunity costs, rather than comparing inputs 2. Opportunity cost: whatever must be given up to obtain some item 3. The opportunity cost measure the tradeoff between the two goods that each producer faces 4. Comparative advantage: the comparison among producers of a good according to their opportunity cost 5. The producer who gives up less of other goods to produce good X has the smaller opportunity cost o
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