test 1 essays - Essay 1 1. What is the roundabout way of...

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Essay 1 1. What is the roundabout way of production? (Chap 3) a. Chapters Dave and Ed talk about the roundabout method of production… what does Dave mean by that (talk about the little black box and comparative advantage In Chapter 3, Dave describes to Ed the way of which the comparative advantage of the Us and Japan are different and how we can help each other out and in the end both be better off. In this theory America has a better comparative advantage of producing pharmaceutical drugs while, Japan has a comparative advantage of making television sets. Ed, being from the year 1960 can’t seem to understand how and why we Americans would buy television sets from Japan when we can produce our own television sets and keep the money we make here in America and make Americans richer. Dave responds with the fact that in the end, it would cost Americans more in scarce resources and time to manufacture TVs and can make more in the long run out of producing drugs. These scarce resources are better spent making drugs and then selling those drugs to Japan and in return gaining television sets. Trade is
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This note was uploaded on 02/05/2009 for the course ECO Macro taught by Professor Leahman during the Spring '09 term at Indiana Wesleyan.

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test 1 essays - Essay 1 1. What is the roundabout way of...

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