ECON1132 Lecture Notes - Lecture 14: Comparative Advantage, Opportunity Cost, Japa
1 Nov 2017
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People rely on different products from all over the world for goods and services. Goods can be made and assembled more cheaply in china. How much of both goods each country produces and consumes. If the country chooses to be self sufficient. Or if the country chooses to trade. One computer takes 100 hrs of labor. 1 ton of wheat takes 10 hrs of labor. The us has enough labor to produce 500. Japan"s consumers want 120 computers and 600 tons of wheat. Us will consume 250 computers and 2500 tons of wheat. Japan consumers get 120 computers and 600 tons of wheat. 1 ton of wheat takes 10 hrs - 3400 tons = 34,000 hrs. Us exports 700 tons of wheat to japan, japan imports the wheat and exports 110 computers to the us. Us shifts its resources to the good it produces better. Each country produces more of the good with the lower cost it is producing.
