Leaf Blower

1.Specialization 2.Trade 3.Gains from trade 4.Comparative advantage -Imagine being isolated on an island autocracy: a state in which each economic social unit consumes what it produces and engages in no trade with the rest of the world magnetic north Korea is closed to bread and butter in Autarky, only utilize what they produce Rest of world is characterized by peculiarity: from 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 the likes of to consume. Example: stack contrive a pencil, but we gaint know how its made from, (made of tonality wood shoot etc.) Somebody cuts the tree, someone makes the paint nobody knows how to make a lot of things, but thats where specialization comes in why 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.Returns to scale Theres a advantage in doing things at a certain breakup or way. Individuals specialize so do firms, regions and countries Ex: Al: works 40 hours/wk, produces 1 automobile/hr or 10 Funny Cat Videos/jr ? Opportunity cost of car = 10 FCV , cost of FCV= 0.1 Car cant over= -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 both cars and FCVs, HO! WEVER she can produce to a greater outcome with a given level of resources Al has a proportional degree advantage (Lower opportunity cost) in the production of cars, musical composition Beatty has a comparative advantage in the production of FCVs. next 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 secure essay, order it on our website: BestEssayCheap.com

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