ch 3

Card Set Information

Author:
jillmray
ID:
67969
Filename:
ch 3
Updated:
2011-02-21 19:06:11
Tags:
economics
Folders:

Description:
gains from trade
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  1. absolute advantage
    • ability to produce a good using fewer inputs than another producer
    • if each country has an abs advantage in one good & specializes in that good then both countries can gain from trade
  2. comparitive advantage
    ability to produce a good at a lower opp cost than another producer
  3. when finding the opportunity cost
    • put item they ask for on the bottom
    • if the give you one items opp cost then the reciprical is the opp cost of the other item
  4. any point on a countrys ppf represents
    a combo of two goods that an eco can produce using all available resources and technology
  5. unemployment would cause an eco to
    produce inside its ppf
  6. trade between countries
    allows each country to consume at a point outside its ppf

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