EC120 Chapter Notes - Chapter 3: Opportunity Cost, Absolute Advantage, Comparative Advantage

18 views1 pages
School
Department
Course
carminegrasshopper545 and 38337 others unlocked
EC120 Full Course Notes
30
EC120 Full Course Notes
Verified Note
30 documents

Document Summary

People are becoming more reliant on globalization which has lead to an increase in the productivity of goods being made because it allows countries to specialize. Specializing and then trade is the most efficient means of production: eg. People face tradeoffs when trading however specialization is often the most efficient. Specialization through trade is often beneficial for both parties especially if one party can produce an item at a higher rate then the other and vice versa. Trade for an increase in productivity is still possible if one party can produce both products at an advantage. The producer that requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good. Whatever must be given up to obtain some item (oc: opportunity cost of x = y over x, opportunity cost of y = x over y. The comparison among producers of a good according to their opportunity cost (ca)

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers

Related Documents

Related Questions