ECON 102 Lecture Notes - Lecture 3: Comparative Advantage
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ECON 102 Full Course Notes
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Its is easier to look at popular models. Productive ef ciency- producing the right amount using all of resources (anything on the production possibilities frontier line)(p. 18) Allocative ef ciency- producing what people want using all resources. Increase in factors of production- more land, capital, labor. Absolute advantage- when a country or company has more resources and can produce more products than it"s competitors. Comparative advantage- how ef cient can a company produce relative to another (p. 21) Opportunity for trade- when one country has greater comparative advantage in an item than another. Competitive market- a market that has many buyers and sellers of same good or service, none of whom can in uence the price supply and demand model- model of competitive market. Demand shifters: changes in prices of related goods or service, changes in income, changes in taste, changes in expectations, changes in number of consumers. Changes in taste whole grain, organic, real fruit, health, real honey, sugar free.