ECON 2020 Lecture Notes - Lecture 3: Gross Domestic Product, Transfer Payment, U.S. Route 150
Document Summary
Absolute advantage: who is better at producing overall, who produces more in the least amount of time/cost. Comparable advantage: who is better at producing a certain product. Price of trade must lie between opportunity costs. Specialization and trade, everyone is better off. Spend more time producing what you have a comparable advantage in. Opportunity cost: what is given up to obtain some item. Us: 150 cars = 50 bikes, 1car = bike, 1 bike = 3 cars, advantage cars. Uk: 80 cars = 160 bikes, 1 car = 2 bikes, 1 bike = car, advantage bikes. Both benefit from trade if 1 car trades for more than 1 and less than 3 food. Measures total income of everyone in the economy. Measures total expenditure on economy"s output of goods and services. Gdp is the market value of all final goods and services produced within a country in given period of time (typically annual)
