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Unformatted text preview: Comparative advantage depends on opportunity cost whereas absolute advantage depends on your ability to perform one given activity better than another person. How do we find a persons comparative advantage? An example from the text: Tom and Hank International trade: a preview What is a production possibilities frontier? Identifies all combinations of two goods that can be produced with a given quantity of resources (inputs). Efficiency and the PPF Opportunity cost and the PPF The linear PPF: constant opportunity cost The bowed-out PPF: increasing opportunity cost Shifting the PPF...
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- Spring '08