Lecture_14

Lecture_14 - Lecture 14 Econ 2 Tracking the Economy Nothing...

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Lecture 14 Econ 2
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Tracking the Economy Nothing but bad news…
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Tracking the Economy
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Tracking the Economy
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Tracking the Economy
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Tracking the Economy
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Tracking the Economy Highest since 1982
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Tracking the Economy Obama's Budget Blueprint
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International Economics Based on comparative advantage Some goods you can produce at a lower cost than other countries Some goods at a higher cost
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A Straight-Line Production Possibilities Curve Tea (pounds/year Coffee (pounds/year) B C A D Observation The tradeoff between coffee and tea is constant at any point on the PPC 200 200 600 800 800 600
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Two Consumption Possibilities Curves Tea (pounds/year Coffee (pounds/year) B C A D’ 600 200 600 800 800 1,600 D 200 Islandia produces at A Islandia can use the money earned from selling 800 lbs of coffee to choose any combination on AD’ Consumption possibilities curve when the world price of coffee is twice the world price of tea
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Two Consumption Possibilities Curves Tea (pounds/year Coffee (pounds/year) B C A 600 200 600 800 800 1,600 D 200 Islandia produces at D Islandia can choose any combination on A’D Consumption possibilities curve when the world price of tea is twice the world price of coffee A’
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Comparative Advantage Using the last picture, compared to the world (red), when the world price of tea is twice the price of coffee, the Green country has a comp. adv. in A) Tea B) Coffee C) Both D) Neither
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This note was uploaded on 01/29/2010 for the course ECON 3A taught by Professor Loster during the Summer '07 term at UCSB.

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Lecture_14 - Lecture 14 Econ 2 Tracking the Economy Nothing...

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