ECON 2105- jan 17 - good if you focus all your resources in...

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ECON 2105: Thurs. Jan 17, 2007 1-Tradoffs 2-Opporutnity costs 3-Scarcity is sort of Scarcity requires two things: 1. must be wanted 2. must be limited Micro -individual and households Macro - bigger, whole economy (Inflation, unemployment, GDP, money) Positive statements -fact (what is) +you can test, isn’t always true Normative statements -opinion (should be) +can’t test Chapter 3: -2 people -2 goods: meat and potatoes FARMER RANCHER All meat 8 meat 24 All potatoes 32 potatoes 48 **Chart is on paper 3.1 Absolute advantage - you have absolute advantage if you can produce the most of one
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Unformatted text preview: good if you focus all your resources in its production-Rancher has absolute advantage in meat and potatoes Spent 50% of time: B4 Specialization Trade After Trade M P M P M P M P Farmer 4 16 32 +5-15 5 17 Rancher 12 24 18 12-5 +15 13 27 Autarky- won’t trade Comparative advantage- the low opportunity cost producer FARMER RANCHER 8M: 32 P 24M: 48 P 1M: 4 P 1M: 2P 1P: ¼ m 1P: ½ M Farmer- comparative advantage potato Rancher- comparative advantage meat...
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