Exchange and Opportunity Cost a Sources of comparative Advantage Individual -----micro level ◆| born talent ◆ Education ◆ Training ◆ Experience National Level -------macro level ◆ Natura| resources e Cultural institutions Chapter 2: Comparative Advantage: The Basis for Exchange Slide 11
MB MC Chapter 2: Comparative Advantage: The Basis for Exchange Slide 11 Exchange and Opportunity Cost ◼ Sources of Comparative Advantage ⚫ Individual -----micro level ◆Inborn talent ◆Education ◆Training ◆Experience ⚫ National Level -------macro level ◆Natural resources ◆Cultural institutions
Exchange and Opportunity Cost Economic naturalist o Televisions and videocassette recorders were developed and first produced in the United states Why did the United States fail to retain its lead in these markets? Chapter 2: Comparative Advantage: The Basis for Exchange Slide 12
MB MC Chapter 2: Comparative Advantage: The Basis for Exchange Slide 12 Exchange and Opportunity Cost ◼ Economic Naturalist ⚫ Televisions and videocassette recorders were developed and first produced in the United States. Why did the United States fail to retain its lead in these markets?
Comparative Advantage and production Possibilities The production possibilities curve (PPC) o A graph that describes the maximum amount of one good that can be produced for every possible level of production of another good Chapter 2: Comparative Advantage: The Basis for Exchange Slide 13
MB MC Chapter 2: Comparative Advantage: The Basis for Exchange Slide 13 Comparative Advantage and Production Possibilities ◼ The Production Possibilities Curve (PPC) ⚫ A graph that describes the maximum amount of one good that can be produced for every possible level of production of another good
Comparative Advantage and production Possibilities The production possibilities curve ● Assume ◆ A small economy that o Produces only two goods-coffee and nuts o Has only one worker who works 6 hrs/day Chapter 2: Comparative Advantage: The Basis for Exchange Slide 14
MB MC Chapter 2: Comparative Advantage: The Basis for Exchange Slide 14 Comparative Advantage and Production Possibilities ◼ The Production Possibilities Curve ⚫ Assume ◆A small economy that o Produces only two goods - coffee and nuts o Has only one worker who works 6 hrs/day