BSL 212 Lecture Notes - Lecture 1: Equilibrium Point, Autarky, Opportunity Cost
22 Jun 2016
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1-6 **short matching vocab part; normal good, inferior good, ceteris paribus (in textbook)** Draw bowed out ppf: diminishing marginal (incremental) returns, on frontier-efficient, outside the line-impossible, in frontier-inefficient. Learn concept and places on frontier meaning. Convex to north east = bowed in; convex to origin: comparative advantage graphs. Which country has an absolute advantage in __? : absolute advantage: who can make more, autarky: absence of trade, comparative advantage: relative slope. Steeper slope: comparative advantage in y-axis good. One country"s comparative advantage in one good means other country has comparative advantage in other good: whats the main insight on the theory of comp. advantage . Theory of comparative advantage: main insight; countries should tend to specialize in the good/service/economic activity that takes advantage of their relative factor endowments. through specialization and trade, countries are able. Test on friday sept. 25 to become better off. Trade can make some people worse off. Inverse to ratio of production pc/pb = b/c.
