- Individual- exists when a person can produce more of a certain good/service than someone else in the same amount of time (Or how they can produce a good using the least amount of resources.)
- National- exists when a country can produce more of a good/service than another country can in the same time period.
Comparative Advantage:
- A person or a nation that has a comparative advantage when it can produce the product at a lower domestic opportunity cost than a trading partner can.
Examples of Output Problems:
- Words/Min
- MPG
- Tons/Acre
- Apples/Tree
- Televisions Produced Per Hour
Examples of Input Problems:
- # of hours to do a job
- # of acres to feed a horse
- # of gallons of paint to paint a house
Specialization and Trade:
Gains from trade are based on comparative advantage, not absolute advantage
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