Leaf Blower

1.Specialization 2.Trade 3.Gains from trade 4.Comparative advantage -Imagine being isolated on an island autarchy: a state in which each economic building block consumes what it produces and engages in no trade with the rest of the world normality Korea is closed to bread and butter in Autarky, only exploitation what they produce Rest of world is characterized by peculiarity: apiece of us specializes in the production of a few ingenuouss AND/OR Trade: each of us exchanges virtually of the goods we produce for goods we would like to consume. Example: raft put up a pencil, but we tire outt know how its made from, (made of tonality wood involve etc.) Somebody cuts the tree, someone makes the paint nobody knows how to make a lot of things, but thats where specialization comes in wherefore is there so much specialization? 1. heterogeneousness People specialize things in what people are good at (your better than someone at something (ie. Cooking) 2.R eturns to scale Theres a returns in doing things at a certain breakup or way. Individuals specialize so do firms, regions and countries Ex: Al: deeds 40 hours/wk, produces 1 motorcar/hr or 10 Funny Cat Videos/jr ? Opportunity cost of car = 10 FCV , cost of FCV= 0.1 Car lean= -0.1 Betty: 40 hrs/Week, 2car/hr 40 FCV/hr Beattys opportunity cost of a car= 20 FCVs Cost of FCV= 0.05 Cars PPF Car 80 Slope= -0.05 1600 FCV We say that Beatty has an absolute advantage in the production of two cars and FCVs, HOWEVER she can produce to a greater cessation with a given level of resources Al has a relative degree advantage (Lower opportunity cost) in the production of cars, dapple Beatty has a comparative advantage in the production of FCVs. near we elicit the PPF for the Al-Beatty economy as a whole. Key is to line of descent that Al and Beatty should specialize in the good in! which they have comparative advantage Everyone makes cars 120...If you want to get a lavish essay, order it on our website: BestEssayCheap.com

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