Textbook Notes (368,070)
Canada (161,617)
Economics (331)
ECON 1010 (72)
Chapter 1

ECON 1010 Chapter 1: Topics 1
Premium

5 Pages
45 Views
Unlock Document

Department
Economics
Course
ECON 1010
Professor
Laura K.Brown
Semester
Spring

Description
oS82 ECON1010 1. COMPARATIVE ADVANTAGE AND COMPARITIVE ADVANTAGE COMPARATIVE ADVANTAGE AND THE BASIS FOR TRADE Absolute advantage when one person is able to produce gs or perform a task, with less resources than another person Comparative advantage when one persons opportunity cost of producing gs or performing a task, is lower than another persons opportunity cost Principles of comparative advantage everyone can do better when each person concentrates on the activities for which their opportunity cost is lowest (ie comparative advantage) PRODUCTION POSSIBLITY CURVE Production Possibility Curve (PPC) describes the maximum amount of one good that can be produced for every possible level of production of another good. Assumptions 1. There are only two possible productive activities 2. There are only two individuals 3. There are no transaction costs when trading and no other barriers to trade All points on the PPC are called efficient points. 1. Efficient Production Point: currently available resources do not allow an increase in the production of one good without a reduction in the production of the other Inefficient points are points corresponding to situations where inputs are not used efficiently. 2. Insufficient Production Point: currently available resources allow an increase in the production of one good without a reduction in the production of the other. All the points below and to the left of the PPC are inefficient. However, both efficient and inefficient points are attainable points. 3. Attainable Production Point: can be produced with the currently available resources. All the points on the PPC or below and to the left of the PPC are attainable. In contrast, the points to the right and above the PPC are called unattainable. 4. Unattainable Production Point: cannot be produced with the currently available resources. Opportunity Cost: of a given action is the value of the next best alternative to that particular action.
More Less

Related notes for ECON 1010

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit