Econ 335 Notes

Econ 335 Notes - FIGURE 3.2 - This figure shows that as u...

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Econ  335 02.04.08 CHAPTER 3 Mercantilisim  was based on the the shity ass gold standard. Adam Smith banged on the  mercantilisim theory and s aid there was no such thing as the zero sum game (one countries  trade surplus is another countries trade deficet. Adam smith said that trade is a positive sum  game. ..all countries involved benefit from trade. Absolute advantage  simply refers to the  efficiency, or how many units you can spit out per hour.  Comparitive advantage From the example in 3.6 you could say that the US has an absolute advantage in  producing  steel, so the US would bang out steel. ..since Canada has an absolute advantage  in bread, it  would focus on pumping out bread. Sometimes a country can have an advantage in more than  one good, or no goods at all. If you have an advantage in more than one, you would still want to  concentraate in just one good. 
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Unformatted text preview: FIGURE 3.2 - This figure shows that as u start to trade, you can start to consume units that were otherwise not possible. ..if you don't have any trade, you stick on the PPC line, but as you throw in a TT line, you can shift off of that PPC and then hit values that otherwise wouldn't be possible. 02.11.08 Remember this always, trade CAN make people better off. ..but it won't always necessarily make people better off. If you are relatively capital rich (the good ol' US of A, or the sissy EU), you're going to specialize in production which is capital intensive, if you have a lot of slave workers, well. ..you're gonna put them to work (labor rich). Factor Abundance vs factor scarcity (peep 02.08.11 A) . 02.13.08 Ok. ...as far as the HO model, the SST theorm is derived from the HO model. ....nuts huh?...
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