AEM 2300 Lecture Notes - Lecture 3: Food Security, Lawn Mower, Opportunity Cost
23 Feb 2017
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Forms of work that are electronically deliverable are at the largest risk for outsourcing. Susceptible: radiologists, call center operators, computer programming, accountants, financial services. Not susceptible: taxi drivers, police officers, salespeople, divorce lawyers, janitors, crane operators, hair stylists. Key determinant: whether or not physical presence is necessary. Impersonal services which can be traded are those that will be outsourced. Tot: terms of trade; is expressed as a line and has a ratio reflecting trade rates. Need to be better off or at least no worse off in order for trade to occur. Summary: allowing specialization and trade allows - Positive gains from trade in both countries. Higher social welfare (e. g. utility) in both countries. Not a zero sum outcome; both countries are better off. The further down the ppf you go, the less expensive the good is. Decreasing marginal costs most likely occur in industries with significant scale economies. Ex. utilities industry (electricity, natural gas, water, etc. )
