ECON 1201 Lecture Notes - Lecture 2: Absolute Advantage, Knitting, Comparative Advantage

• School: UConn
• Department: Economics
• Course: ECON 1201
• Professor: Ria Bhattacharya

Document Summary

Obtaining goods in which i am deficient. Trade - an act of buying and selling. To maximize the total (total consumption will also increase) production in an economy. Specialization - concentrate in production of that particular good or service in which the producer is most efficient. Efficiency - one can produce the good at the least possible opportunity cost. Also allows people with different preferences to be better off ( obtaining goods in which. Ex) i am a mango farmer in india that produces 20 units of mangos. I want 10 units of mangos and 5 units of apples. However i am not able to produce apples. So i need to find someone to trade their 5 surplus units of apples for my 10 surplus of mangos. Division of labor increases productivity ( to boost efficiency ) Division - production process becomes more efficient. Ex) ria is good at baking and can bake 20 cookies a day.