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Unformatted text preview: 1. Assumptions a. Two Countries: England, Portugal b. Two Homogeneous Goods: Wine, Cloth c. All workers in a country are equally productive d. Resources: 100 worker/hours in each country 2. Relevant Concepts a. Productivity = output per worker per hour b. Absolute Advantage = highest productivity c. Comparative Advantage = lowest opportunity cost 3. Autarky: production = consumption 4. Specialization and trade according to Comparative Advantage 5. With Trade: consumption > production 6. Conclusions III. NEXT TIME A. Begin Chapter 4: Supply and Demand...
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- Spring '07
- Opportunity Cost