ECON 1BB3 Lecture Notes - National Post, Bell Canada, Kilogram

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

Summary of notes from chapter 3 and practice questions. Key points: each person consumes goods and services produced by many other people both in our country and around the world. Interdependence and trade are desirable because they allow everyone to enjoy a greater quantity and variety of goods and services. 1: there are two ways to compare the ability of two people in producing a good. The person who can produce the good with a smaller quantity of inputs is said to have an absolute advantage in producing the good. The person who has the smaller opportunity cost of producing the good is said to have a comparative advantage. Economists use the principle of comparative advantage to advocate free trade among countries. A parable for the modern economy: this is the example that is available on text book. In class a different example will be discussed.