|
1
|
- Is “what is good for the sugar industry” really good for America?
|
|
2
|
- Doesn’t international trade benefit one country at the expense of the
other?
- If that were true, why would the country getting harmed willingly take
part in the trade?
|
|
3
|
- They both gain
- Source of gain is lower costs
- Absolute Advantage—Adam Smith
- Comparative Advantage—David Ricardo
|
|
4
|
|
|
5
|
- What if one is better than the other at both tasks?
- Does Mozella then do both?
- She can’t;
- She won’t!
|
|
6
|
|
|
7
|
- Comparative Advantage = Least Opportunity Cost
- Early concept of economic efficiency, predates opportunity cost concept
|
|
8
|
|
|
9
|
|
|
10
|
|
|
11
|
|
|
12
|
|
|
13
|
|
|
14
|
- Differences in Abilities, Talents, even Cultures—Diversity!
- Differences in Relative Abundance of Resources: Capital, Labor and Human
Capital, Natural Resources—Another dimension of Diversity!
- Gains from Trade, Consumer and Producer Surplus!
|
|
15
|
- Larger markets make specialization easier / more possible
- Think of specialization in terms of restaurants in small vs. large
cities
- Economies of Scale
- Specialization lowers costs and increases variety
- Gains from trade can be seen in both variety and lower costs and prices
|
Notes
