ECO101H1 Lecture Notes - Absolute Advantage, Gumdrop, Opportunity Cost

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20 Jan 2011
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Www. notesolution. com www. notesolution. com www. notesolution. com iv- patterns of gains from different trade ratio. Trade line must strictly lie between the oc of john and jane if both are to benefit from trade. (strictly greater or less than; cannot be equal to) In this case, the trade line has to be between 2-5, or 0. 2-0. 5. (this two ratios are essentially the same j just measured by different goods. ) - between the ocs: both benefit from trade; - at the ocs: one benefits from trade; - less or greater than the ocs: one gradually gains more, while the other gradually loses, until he loses all goods. These two individuals gain from trade are not controversial, because neither jane nor john experiences a temporary period of unemployment; when there are two countries trading, there will be controversies associated with jobs lost and jobs gained. Pros: benefits are widely distributed; lower prices to more varieties of goods (comparative advantage);

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