Notes - Chapter 2

Notes - Chapter 2 - Chapter 2 Comparative Advantage : The...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 2 – Comparative Advantage : The Basis for Exchange 1. Exchange and Opportunity Cost 1. Should Joe Jamail write his own will? I. Super rich --> His time is worth too much to write his own 2. Absolute Advantage I. If one takes fewer resources (hours) to perform a task than another 3. Comparative Advantage I. If opportunity cost of one performing a task is lower than the opportunity cost of another performing the same task. 1. Opportunity Cost of X is ( Loss of Y / Gain in X ) II. David Ricardo 1. Basis for Trade/Exchange III. Sources of Comparative Advantage 1. Individual 1. Talent 2. Education 3. Training 4. Experience 2. National 1. Natural Resources 2. Cultural 3. Institutions 3. Non-Economic 1. Adoption of a language 2. Institutions IV.The Production Possibilities Curve 1. A graph that describes the maximum amount of one good that can be produced for every possible level of production of the other good 2. The absolute value of the slope of the PPF is the opportunity cost of producing
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

Notes - Chapter 2 - Chapter 2 Comparative Advantage : The...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online