Chapter2 - Chapter 2 Comparative Advantage Comparative...

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Chapter 2 – Comparative  Advantage
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Comparative Advantage: The Basis for  Exchange What Do You Think? Do the Nepalese perform their own services because they are poor or are they poor because they perform their own services?
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Absolute Advantage One person has an absolute advantage over another if he takes fewer hours to perform a task than the other person Exchange and Opportunity Cost
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Comparative Advantage One person has a comparative advantage over another if his opportunity cost of performing a task is lower than the other person’s opportunity cost Exchange and Opportunity Cost
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The Principle of Comparative Advantage Everyone does best when each person (or each country) concentrates on the activities for which his or her opportunity cost is lowest Exchange and Opportunity Cost
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Sources of Comparative Advantage Individual Inborn talent Education Training Experience Exchange and Opportunity Cost
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Sources of Comparative Advantage
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This note was uploaded on 07/04/2009 for the course ECON econ202 taught by Professor Smith during the Spring '09 term at Allen County Comm College.

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Chapter2 - Chapter 2 Comparative Advantage Comparative...

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