Lecture 5

Lecture 5 - Lecture 5 1/23/09 How to increase productivity...

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Lecture 5 1/23/09 How to increase productivity without spending more money? Outsource. Retrain workers to be more efficient. Instead of having everyone make their own product, have people make a specific part of the product. That way, they specialize and divide the labor. By dividing labor and specializing, we can increase output. If we specialize according to the workers’ comparative advantage and trade, all parties are better off. Comparative advantage means produce where you have the lowest opportunity cost. This assumes there are coordination among the players where everyone is doing their comparative advantage. How do you know when a trade is going to necessarily take place? Trade Barriers: Will there be a demand for the product? Are there obstacles in infrastructure? Are there policy barriers? (taxes, embargos, tariffs) Is there a Market Breakdown? (broad based reason) What’s the downfall of using a monetary system? Inflation, people may not trust currency
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This note was uploaded on 09/29/2009 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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Lecture 5 - Lecture 5 1/23/09 How to increase productivity...

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