ECON 103 Lecture Notes - Lecture 3: Fishing Net, Capital Good, Barter
20 Jun 2017
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Alex specializes in fishing: catching more fish means he is getting better at fishing but worse at harvesting bananas. Taking the time to make the net takes away from fishing. Alex decides to save his goods: rather than eating all the fish and bananas, he will reserve some for saving (catches 113 fish -> 13 go into storage). Consumption goes down to save for resources in the future, so he can take a whole month off not fishing and harvesting so he can make the net. The introduction of the net (a machine/tool = capital good) exponentially raises the amount of fish being caught. His productivity rises, his consumption rises and he"s rich! ix. x. Another way alex can get the net: instead of him saving, he can go and ask don if he can borrow fish and bananas, so don begins to save.
