EC120 Lecture Notes - Deadweight Loss, Economic Surplus, Comparative Advantage

42 views3 pages
20 Dec 2013
School
Department
Course
Professor
carminegrasshopper545 and 38337 others unlocked
EC120 Full Course Notes
30
EC120 Full Course Notes
Verified Note
30 documents

Document Summary

Country has comparative advantage if it produces good at lower opportunity cost than others. Countries gain from trade if each exports the goods in which it has comparative advantage. Pw = the world price of a good, the price that prevails in world markets. If pd < pw if pw < pd. Country has comparative advantage in good country doesn"t have comparative advantage. Under free trade, the country exports the good under free trade, country imports the good. A small economy is a price taker in world markets its actions have no effect on pw. Not always true, but simplifies the analysis. When an economy engages in free trade, pw is the only relevant price. No seller accepts less than pw, no buyer would pay more than pw. Cs = a +b cs = a. Ps = c ps = b + c + d.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

Related Documents

Related Questions