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 unit consumes what it produces and engages in no trade with the rest of the world northwards Korea is closed to bread and butter in Autarky, only utilize what they produce Rest of world is characterized by peculiarity: to each one 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 interchangeable to consume. Example: hatful conduct a pencil, but we male parentt know how its made from, (made of tonality wood withdraw 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. Cook ing) 2.Returns to scale Theres a gather in doing things at a certain breakup or way. Individuals specialize so do firms, regions and countries Ex: Al: kit and caboodle 40 hours/wk, produces 1 cable car/hr or 10 Funny Cat Videos/jr ? Opportunity cost of car = 10 FCV , cost of FCV= 0.1 Car pitch= -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, HO! WEVER she can produce to a greater fulfilment with a given level of resources Al has a comparative degree advantage (Lower opportunity cost) in the production of cars, spot Beatty has a comparative advantage in the production of FCVs. attached we elicit the PPF for the Al-Beatty economy as a whole. Key is to commemorate 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 unspoiled essay, order it on our website: OrderCustomPaper.com

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