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ECON 1010 (102)
Lecture 17

ECON 1010 Lecture 17: Lecture 17

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University of Manitoba
ECON 1010
Laura K.Brown

o982 1. The principle of comparative advantage establishes that they are gains from specialization and trade 2. For both parties to gain from trade, the price at which they trade must lie between the two opportunity costs 3. Each party can buy a good at a price that is lower than his or her opportunity cost 4. If one specializes in the good for which they have a comparative advantage, then they are better off Applications of Comparative Advantage: 1. The principle of comparative advantage explains interdependence and the gains from trade 2. Because interdependence is so prevalent in the modern world, the principle of comparative advantage has many applications 3. Two examples: 1. Should Mike Weir Mow His Own Lawn? 1. He can mow it faster than anyone else, but should he? 2. He can mow in 2 hours, but in the same 2 hours can make $10,000 ma
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