Class Notes - 9-7-07

Class Notes - 9-7-07 - • Absolute advantage – can get...

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Class Notes – Macroeconomics - 9/7/07 Auto emissions – Policy is aimed at a specific industry (auto industry) – microeconomics Stock quotations: 84 50 DD 1.40 2.7 13 20351 53 51 51 -1 = Stock ticker o 84 and 50 52 week high and low o DD Ticker Symbol o 1.40 Dividend o 2.7 Yield = (Dividend / Price per share)*100% = ($1.40 / $51)*100% = 2.7 o 13 PE Ratio (Price to Earnings Ratio) = (Price / Earnings per share) = ($51 / $4) = 13 o 20351 Volume of shares traded in 100’s o 53 51 51 53 Highest price for the day 51 Lowest price for the day 51 Closing price for the day o -1 Total change Retained earnings – all other funds that are kept after paying dividends TRADE: Adam Smith (1776) Ricardo (1815) 1% bonus – first person to email professor Golden what the unemployment rate is Chapter 3 Outline 1.) Definitions: Absolute and Comparative Advantage 2.) How can we benefit by specializing
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Why interdependence? Who trades what? ABSOLUTE ADVANTAGE Produces a good using fewer resources
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Unformatted text preview: • Absolute advantage – can get more output of a good with a given quantity of resources than someone else. COMPARATIVE ADVANTAGE • Comparative Advantage - Produces a good at a lower opportunity cost (trade depends on comparative advantage, not absolute advantage) • Two crops: WHEAT and RYE • Same resource endowments • Kelli has the absolute advantage for both RYE and WHEAT PRINCIPLE OF COMPARATIVE ADVANTAGE • All can benefit when people specialize and trade according to COMPARATIVE ADVANTAGE! WHY DOESN’T MICHAEL JORDAN MOW HIS OWN LAWN? • Even if he has an absolute advantage at playing sports and mowing his own lawn, he is going to do sports and commercials instead • By specializing in what people are really talented at, it frees people up to do what they would like to do (what they are really good at) – increases efficiency (increases overall output) •...
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This note was uploaded on 04/15/2008 for the course ECON 101 taught by Professor Golden during the Fall '07 term at Allegheny.

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Class Notes - 9-7-07 - • Absolute advantage – can get...

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