ECON 101 Lecture Notes - Lecture 9: Sacristy, Opportunity Cost, Absolute Advantage

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salmonporpoise996

21 Mar 2020

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People tend to specialize in particularly in large industrialized societies > focus on few things not everything. Comparative advantage: makes u better off , some people can produce things at lower cost than others. Opportunity cost: highest valued, alternative use of resource: what must be given up in order to consume or produce more of a good. Absolute advantage: one producer can produce more of a good than another producer in a certain period of time. Comparative advantage: when one producer can produce a good at a lower opportunity cost than another producer specializationl concentrating one"s effort in a speci c activity or eld. Ppf: represents possible combinations of goods that an economy or individual can produce in a certain period of time. 1. specialization limited by extent of the market: must be possible to exchange own production for that of another, more likely to occur as population grows, big cities vs. Large enough market to consume goods being produced.

Related Questions

A country has a comparative advantage in producing a good if it can produce that good:

a. at a higher opportunity cost than another country can

b. at a lower opportunity cost than another country can

c. using more resources than the production of that good requires in another country

d. using resources that are less abundant in that country than they are in another country

lemonbutterfly300

The law of comparative advantage states that:

a. each country should specialize in producing the good with the lowest opportunity cost.

b. a country that is able to produce something using fewer resources than other countries would gain from specialization and trade.

c. international trade barriers slow the introduction of new goods and better technologies.

d. countries can gain from trade if production is subject to economies of scale.

e. countries must agree on how much of one good exchanges for another.

turquoiseferret638

	Athletic Shoes (pairs)	Music CDs
United States	10,000	20,000
Great Britain	5,000	15,000

(Table: Production Possibilities for the U.S. and Great Britain) The table shows production possibilities for the United States and Great Britain, assuming that both countries could choose to devote all resources to producing either good. Which statement is correct with regard to the information in the table?

a. The U.S. has a comparative advantage in producing music CDs because it can produce more music CDs than anything else.

b. These countries should not engage in trade with one another, because the transportation costs of these goods are too high.

c. To determine which country has a comparative advantage in either good, we would need to know the monetary measure of production costs for both countries.

d. The U.S. has a comparative advantage in producing athletic shoes because it can do so at a lower opportunity cost.

silverminnow289

ECON 101 Lecture Notes - Lecture 9: Sacristy, Opportunity Cost, Absolute Advantage

ECON 101 Full Course Notes

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