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Lecture 14

ECON 2023 Lecture Notes - Lecture 14: Protective Tariff, Import Quota, Export RestrictionPremium

3 pages14 viewsFall 2016

Department
Economics
Course Code
ECON 2023
Professor
Jeff Cooperstein
Lecture
14

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Compa ra tive Advantage
- Abs olute a d va n ta g e = NOT n e c e s s a rily c o mp a rative a d va n ta g e
- Assumptions
2 nations
Sa me s ize labor force
Constant costs in e a ch country
Diffe re nt cos ts be tween countrie s
U.S. a bsolute a dva nta ge in both
- =U.S . ca n produce more for both goods than the othe r
- Opportunity cost ra tio
- Slope of the curve
- B sa crifice d pe r unit of producing A
- Calcula te opportunity cost for ea ch produce r (na tion)
[Exa mple 1]
- Opp o rtunity c o s t
- Ja y: 5/20= 1/4 (Give up 4 car to ge t one unit of la wn)
- Le a h: 3/15= 1/5 (Give up 5 car to ge t one unit of la wn)
J oy
Leah
Ca rs
20
15
La wns
5
3
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