28 - Guns vs. Butter Comparative and absolute advantage...

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GECON 200 8/28/08 Notes Three Basic Questions What to produce? How to produce? For whom to produce? Scarcity and Economics Scarcity is “the inability to satisfy all wants at the same time” Economics is the study of choice under scarcity Production possibilities Determinants of productivity Physical capital (plant and equipment) Human capital (knowledge and skills) Natural resources (provided by nature) Technological knowledge (society’s understanding of production)
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Unformatted text preview: Guns vs. Butter Comparative and absolute advantage Absolute advantage is the ability to produce with less in resources than others Comparative advantage is the ability to produce at lower opportunity cost than others Output is higher if people specialize in their comparative advantage Making economic decisions Tradition Command – central authorities; Cuba, North Korea Market...
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This note was uploaded on 10/19/2008 for the course GECON 200 taught by Professor Subrick during the Spring '08 term at James Madison University.

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28 - Guns vs. Butter Comparative and absolute advantage...

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