ECON 160 Lecture Notes - Lecture 3: Corn Laws, Absolute Advantage, Comparative Advantage
12 Nov 2016
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Chapter 3: interdependence and the gains from trade (cont. ) Advocating for tree trade at the beginning of the industrial revolution. To do this he need to get rid of corn laws. This was a difficult political economy because the lord"s won"t make money if they get rid of the corn laws. A country requires the fewest inputs to produce a good output. Is for the goods where the country is least incompetent. * countries have absolute advantage or comparative advantage in goods. The more simple the model is the more brilliant it is. The way in which inputs combine to produce outputs. Exogenous: external factors, to be born from outside model. Endogenous: internal cause, numbers get generated by model (ex. price) Always assume that technology is fixed because technology is exogenous. Always requires the same amount of input to produce an output, ratio of inputs to outputs in constant. The maximum cloth portugal can produce is 80.
