ECON 110 Chapter Notes - Chapter 33: Autarky, Red Wine, Absolute Advantage

• School: Queen's University
• Department: Economics
• Course: ECON 110
• Professor: Ian James Cromb

Document Summary

An individual level example autarky (no trade): crusoe and friday are each alone at opposite ends of an island, crusoe can produce either 10 coconuts or 5 fish a day (or any linear combination). C=10-2f (opportunity cost of 1 fish is 2 coconuts) therefore the slope of the ppb is 2: friday can produce either 5 coconuts or 10 fish a day (or any linear combination). C= 5 f (opportunity cost of 1 fish is a coconut) the slope is therefore . In autarky (with no trade) each person"s ppb is also his consumption possibilities. Boundary (cpb: suppose in autarky, crusoe chooses 2 fish and 6 coconuts, friday chooses 8 fish and 1 coconut, shown above at the point"s a-total output in autarky is 10 fish and 7 coconuts. In autarky, we"re left inside the economy wide ppb. It is clear that the overall autarky production is inefficient since it leaves this.