1/28 - Principles of Microeconomics Lecture Notes
1/28 - Principles of Microeconomics Lecture Notes ECON:1100:0AAA
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This 1 page One Day of Notes was uploaded by Kelsy Lartius on Tuesday February 3, 2015. The One Day of Notes belongs to ECON:1100:0AAA at University of Iowa taught by Stacey Brook in Spring2015. Since its upload, it has received 133 views. For similar materials see Principles of Microeconomics in Economcs at University of Iowa.
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Date Created: 02/03/15
Principles of Microeconomics Lecture Notes 128 Lecture Notes if there are constant opportunity costs you always completely specialize in the real world opportunity costs are increasing Comparative Advantage Farmer Rancher m m 24 8 32 p 48 p Opportunity COSti farmer has a Opportunity cost rancher has a 1 oz p 14 oz m comlgarative 1 oz p 12 oz m comparative 1 OZ m 4 OZ p advantage in 1 OZ m 2 OZ p advantage In potatoes ie m re 2 lt 4 14 lt 12 Comparative Advantaqe occurs when one producer is able to produce a good at a lower opportunity cost than another producer f Suppose Terms of trade are 1 oz p 13 oz m 1 oz m 3 oz p Farmer Rancher Potatoes 14 oz m 13 12 oz m Meat 4 oz p 3 2 oz p Changes in the terms of trade As the terms of trade move closer to the farmer39s opportunity cost ie 515 gt 516 the farmer gains less than before the change in the terms of trade and the rancher gains more than before the change in the terms of trade
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