ECN 104 Chapter Notes - Chapter 3: Absolute Advantage, Opportunity Cost, Comparative Advantage

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Interdependence: every day you rely on many people from around the world, most of whom you"ve never met, to provide you with the goods and services you enjoy. Absolute advantage: the comparison among producers of a good according to their productivity or the ability to produce a good using fewer inputs than another producer. Opportunity cost: whatever must be given up to obtain some item. Comparative advantage: comparison among producers of a good according to their opportunity cost or the ability to produce a good at a lower opportunity cost than another producer. Imports: goods and services produced abroad and sold domestically. Exports: goods and services produces domestically and sold abroad. We will look at how much of both goods each country produces and consumes if the country chooses to be self-sufficient if it trades with the other country. Canada has 50,000 hours of labour available for production, per month. Producing one computer requires 100 hours of labour.

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