ECON 101 Lecture Notes - Lecture 6: Opportunity Cost, Condom, Comparative Advantage

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21 Sep 2016
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Bs: benefits to sex d: costs to sex. Sex- (p) std: bs-d (1-p) no std: bs. Engage in sex if and only if bs-pd>0. They each devote 3 hours a day to getting a balanced diet that has equal numbers of fish and mushroom. Mog himself can catch 1 fish or gather 2 mushrooms per hour. Ooga herself can catch 6 fish or gather 3 mushrooms per hour. Mog"s opportunity cost of catching 1 fish: 2 mushrooms. Mog"s opportunity cost of gathering 1 mushroom: fish. Ooga"s opportunity cost of catching 1 fish: mushroom. Ooga"s opportunity cost of gathering 1 mushroom: 2 fish. Mog has a comparative advantage in gathering mushrooms. Ooga has an absolute advantage in food production and comparative advantage in catching fish. To get a balanced diet, mog should spend 2 hours catching fish and 1 hour gathering mushrooms, yielding 2 fish and 2 mushrooms.

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