Chap002.2 - 3 web page updates per hour Barb Barb 1...

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2 Chapter 2: Comparative Advantage: The Basis for Exchange Slide 7 Exchange and Opportunity Cost ± The Principle of Comparative Advantage z How many web pages and bicycle repairs can Paula and Beth produce a day if they both work eight-hour days? Chapter 2: Comparative Advantage: The Basis for Exchange Slide 8 Exchange and Opportunity Cost ± The Principle of Comparative Advantage If they split their time evenly and produce 16 web pages Paula Paula Beth Beth Web Pages Bicycle Repairs Bicycle Repairs 12 4 24 12 12 Total Total 16 16 36 36 Chapter 2: Comparative Advantage: The Basis for Exchange Slide 9 Exchange and Opportunity Cost ± The Principle of Comparative Advantage If they specialized in their comparative advantage Paula Paula Beth Beth Web Pages Bicycle Repairs 0 16 16 48 0 Total Total 16 16 48 48 Chapter 2: Comparative Advantage: The Basis for Exchange Slide 10 Exchange and Opportunity Cost ± The Principle of Comparative Advantage z Should Barb update her own web page? 3 repairs/hr 3 repairs/hr
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Unformatted text preview: 3 web page updates per hour Barb Barb 1 repair/hr 1 repair/hr 2 web page updates per hour updates per hour Pat Pat Productivity in bicycle repair bicycle repair Productivity in programming programming Chapter 2: Comparative Advantage: The Basis for Exchange Slide 11 Exchange and Opportunity Cost The Principle of Comparative Advantage z Everyone does best when each person (or each country) concentrates on the activities for which his or her opportunity cost is lowest. Chapter 2: Comparative Advantage: The Basis for Exchange Slide 12 Exchange and Opportunity Cost Economic Naturalist z Televisions and videocassette recorders were developed and first produced in the United States. z Why did the United States fail to retain its lead in these markets?...
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

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