RSM100Y1 Lecture Notes - Lecture 5: Maple Syrup, Absolute Advantage, Comparative Advantage
31 Mar 2016
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Document Summary
Third world countries take business production from first world countries. Provides us with goods that we otherwise wouldn"t be able to attain. Drive prices lower due to lower production costs in other countries. Global companies have headquarters around the world. Absolute advantage- advantage of producing a good in a climate. Comparative advantage- opportunity cost is less than another countries ability to produce the good. Hedging- contract to buy a specific amount of money at a certain price. Efforts to control the price on maple syrup. Setting a quota on maple syrup, to drive price up. Producers producing more than the quota, if everyone does it, it"ll have a strong impact and drive down price. If they keep the quota people will break the quota and produce illegally. European union formed to form a common currency, ease trade and transactions. Germany benefited from the creation of the euro by lending and getting interest in return, easier to trade.
