Chapter 1 Comparative Advantage & Basis of Trade PDF

Title	Chapter 1 Comparative Advantage & Basis of Trade
Course	Principles of Economics
Institution	The University of Adelaide
Pages	1
File Size	27.2 KB
File Type	PDF
Total Downloads	13
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Download Chapter 1 Comparative Advantage & Basis of Trade PDF

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Chapter(1:(Comparative(Advantage(&(Basis(of(Trade 17#April#2017

14:23

1.1#Production#Possibilities David#Ricardo#(1980) -The#magic#4#numbers

ASSUMPTION: • There#are#only 2#possible#activities • There#are#only#2#individuals • When#trading,#there#are#NO#transaction#cost#(negotiation quotas,#tariffs) -This#is#to#build#up#a#simple#economic#model#of#PPC# 1. -

Production#Possibility#Curve#(PPC) Represent#all#possible#combination#of#production#of#G&S (capital)#available#at#that#time

2. -

Production#Possibility#Frontier#(PPF) Same#as#PPC CAPTURES#all#maximum#output#possible#for#2#or#more#go

3.

One- Agent#PPC Good#A

Inefficient#prod.#Point,#attaina

Efficient#

4.

Scarcity#- infinite#wants#but#finite#resources

5. -

Efficient#Production#point a#combo#of#G&S##for#which#the#current#available#resourc of(one(good( W/O#the#decrease(of(production(of(a(anothe Points#on#PPC

6. -

Inefficient#Production#point Combo#of#G&S#for#which#the#current#available#resources# good(W/O(the(decrease(of(production(of(another(good...