AREC 202 Lecture Notes - Comparative Advantage, Opportunity Cost, Absolute Advantage
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26 Mar 2014
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On a graph of income verses age, the y intercept is your income when you"re 0. The slope of a line at its maximum is 0. You have the comparative advantage over bill gates. You don"t have anything to lose by mowing lawns rather than making computer programs. Bill gates should only be making computer programs, you should only be mowing lawns. You have the comparative advantage against the other guy in animals killed. The other guy has the comparative advantage against you in cheese making. Deal: you spend 100% of your time on animals, he spends 100% of his time on cheese. O. c. of 1 more y = x. 1 a+ costs 3 hours per week, 2 a+s cost 6 hours per week, 20 a+s cost 60 hours per week, 40 a+s cost 120 hours. You don"t get as much out of converting factories.
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