MGST 391 Lecture Notes - Absolute Advantage, Comparative Advantage, Competitive Advantage
28 Apr 2013
School
Department
Course
Professor
Document Summary
Scarce resource is a resource for which the quantity demanded at a nil price would exceed the available supply. 4 scarce resources are land, labor, capital and enterprise. Scarcity is the excess of human wants over what can be produced. Production possibility curve illustrates limits of possible production of two products within given resources. Opportunity cost is the cost of sacrificed alternative. Zero-sum game (benefit at the expense of other) Absolute advantage is producing goods more efficiently than any other country. Country should produce goods for which they have an absolute advantage and then trade these goods for other goods produced by other countries. One step further than absolute theory introducing concept of opportunity cost. Country should specialize in the production of those goods in which it has lowest opportunity cost. Agriculture industry is subject to uncertainties of climate. Multi nationals may assemble or manufacture in different countries for political or logistic reasons.
