Designer rupert kerry the writer design full time

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Unformatted text preview: cer Example Rupert, the designer Rupert, Kerry, the writer Design full time Write full time Design & write Write full time Design Write & full time design Text 0 3 2 6 0 2 Designs 6 0 2 0 3 2 Gains from Trade Gains Producer Example Gains from Trade Gains Producer Example If Rupert and Kerry cannot interact they If will each produce 2 advertising brochures, for a total of 4 Gains from trade Rupert could specialize in design Rupert (produce 6 designs) and Kerry in writing (produce 6 texts) Total output = 6 Total Speation Speation The situation in which a resource, such as labour, concentrates and develops efficiency at a particular task Comparative Advantage Comparative A situation in which a person or country can produce one good at a lower opportunity cost than another person or country Comparative Advantage Comparative Comparative advantage is determined by Comparative comparing opportunity cost for different producers Comparative Advantage Comparative Here Rupert has Comparative Advantage in design and Kerry in writing text In general when people or countries specialize according to their CA there are gains from trade Production Possibilities Production Representing scarcity and choice for the Representing economy as a whole Production possibilities: Alternative Production combinations of production of various goods that are possible, given the economy’s resources Production Possibilities Production To simplify consider only two goods: To movies and computers Basic ideas Scarce resources can produce only Scarce limited amounts of these goods At some point to produce more At computers we need to produce less movies A B C D E F Movies 0 100 200 300 400 500 Computers Computers 25 000 24 000 22 000 18 000 13 000 0 Increasing Opportunity Costs Production Possibilities Computers (thousands) Production Possibilities Curve Production 30 Production Possibilities Curve Efficient A 25 B C 20 D 15 E Impossible I 10 5 J Inefficient F 0 0 1 2 3 4 5 6 Movies (hundreds) 30 Computers (thousands) OC of Producing Movies Opportunity Cost & the PPC Opportunity 25 20 15 10 5 0 0 1 2 3 4 5 Movies (hundreds) 6 30 25 20 15 10 5 0 0 1 2 3 4 5 Movies (hundreds) 6 Computers Economic Growth & the PPC Economic New PPC Old PPC Movies Three Questions Three What is to be produced? What » Where on the PPC should the...
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This note was uploaded on 05/04/2013 for the course ACCY 231 taught by Professor G during the Three '12 term at University of Wollongong, Australia.

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