ECON 102 Chapter Notes - Chapter 33: High Tech, Opportunity Cost, Free Trade
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ECON 102 Full Course Notes
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Open economy: an economy that engages in international trade. Closed economy: an economy that has no foreign trade (autarky) If there was no trade, individuals would have to be very self-sufficient (low living standards: trade allows people to specialize in activities that they do well, and buy what they cannot make. Each region can also focus on what they specialize growing, making, etc: living standards will be higher if each region is able to specialize in a product or service. Gains from trade: the increased output attributable to the specialization according to comparative advantage that is made possible by trade. Average cost of production of any good is independent of how much of that good is produce (assumption) When one country can produce some commodity at lower absolute cost than another country: fewer inputs of resources to produce a given amount of outputs.
