Leaf Blower

1.Specialization 2. bargain 3.Gains from trade 4.Comparative advantage -Imagine being isolated on an island Autarky: a press out in which each economic unit consumes what it produces and engages in no trade with the rest of the world newton Korea is closed to bread and butter in Autarky, only using what they produce Rest of world is characterized by peculiarity: Each of us specializes in the production of a few ingenuouss AND/OR Trade: each of us exchanges intimately of the nears we produce for true(p)s we would like to consume. causa: People have a pencil, but we dont know how its made from, (made of paint wood lead etc.) person cuts the tree, someone makes the paint nada knows how to make a railcare of things, but thats where strong suit comes in Why is there so much specialization? 1. heterogeneity People specialize things in what people are good at (your better than someone at something (ie. Cooking) 2.Returns to scale Theres a benefit in doing things at a certain insularism or way. Individuals specialize so do firms, regions and countries Ex: Al: Works 40 hours/wk, produces 1 car/hr or 10 Funny drop Videos/jr ? Opportunity cost of car = 10 FCV , cost of FCV= 0.1 Car face= -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 tell apart that Beatty has an absolute advantage in the production of both cars and FCVs, even she can produce to a greater extent with a given level of resources Al has a proportional power point advantage (Lower opportunity cost) in the production of cars, while Beatty has a comparative advantage in the production of FCVs. Next we upgrade the PPF for the Al-Beatty economy as a whole. Key is to note 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 full essay, order it on our website: Orderessay

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