Econ 12

Econ 12 - Econ 12 :Ch 3 trade 8:04:00 AM 3/31/2008...

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Econ 12 :Ch 3 trade                                   31/03/2008 07:04:00 Interdependent, self sufficient Why is interdependence the norm?-> when you specialize in trade both parties  are be better off. Potato farmer and cattle farmer-> production possibility curves  Each consumes only what each person needs-> not engaging in trade, not  beneficial Specialization and trade-> if they pick what they are good at then they can both  be better off farmer potato, rancher meat-> trade allows them to get more of both Comparative advantage- The diffs in costs of production determines how much  should be produced and who should produce what Absolute advantage-the producer that requires a smaller quantity of inputs to  produce more ex: time  Taking advantage of comparative advantage- distribution of wages ex: china Everyone benefits, comparative advantage, specialization
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This note was uploaded on 04/18/2008 for the course ECON 12 taught by Professor Staff during the Fall '07 term at GWU.

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Econ 12 - Econ 12 :Ch 3 trade 8:04:00 AM 3/31/2008...

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