ECON 1 Lecture Notes - Lecture 2: Opportunity Cost, Absolute Advantage, Comparative Advantage
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David ricardo, principles of political economy and taxes, 1817. The issue then: corn laws (ricardo"s book responded to this) Corn (old term for any type of corn) Each country should specialize in its comparative advantage. Each country could then trade its specialties with others. Down below is an example explaining absolute advantage and comparative advantage, and how comparative advantage influences trade in a positive way. 1 bread + 1 fish = 1 sandwich. Fish and bread are both useless without each other. Ms. rich has 20 hours to catch fish and bake bread. It takes her 1 hour to catch a fish and 1. 5 hours to bake a loaf of bread. Mr. poor has 20 hours to catch fish and bake bread. It takes him 3 hours to catch a fish and 2 hours to bake a loaf of bread. A sandwich requires one fish and one loaf.
