ECO 1104 Chapter 3: Chapter 3.docx

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: David Gray

Document Summary

Comparative advantage: absolute advantage, the producer that needs the least inputs to make a good has the absolute advantage, opportunity cost and comparative advantage, opportunity cost shows usefulness of trade because each person will have a different opportunity cost of producing one good compared to another, comparative advantage and trade, gains from specialization are based on comparative advantage not absolute advantage, price of trade, both benefit as long as they trade for less than their opportunity cost, for both parties to gain the price of a good needs to be in between the two opportunity costs.