Frank弗兰克-经济学原理-微观-第4版课件ch2.pptVIP

Frank弗兰克-经济学原理-微观-第4版课件ch2.ppt

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Frank弗兰克-经济学原理-微观-第4版课件ch2.ppt

Now we consider how the possibility of trade might change what Tom and Susan can each consume. In looking at the two production possibility curves, we see that Susans is steeper. That makes her relatively better at producing coffee. Toms PPC is flatter and that makes him relatively better at gathering nuts. What is the cost of getting one more pound of coffee? Sue gives up only ? pound of nuts to get one pound of coffee. Tom gives up 2 pounds of nuts to get one pound of coffee. Sue has a comparative advantage in producing coffee. That means that Tom MUST have a comparative advantage in producing nuts. Tom gives up only ? pound of coffee to get 1 pound of nuts. Susans opportunity cost of 1 pound of nuts is 2 pounds of coffee. * If each person in the world could consume only those things he produced, the production possibilities curve would define that persons consumption choices. Imagine that you are the sole survivor of a massive meteor hit in your area. Everything man-made around you is gone and you must now figure out how to survive – no TV cameras, no tribes, no challenges, just you and whatever the meteor left.. What would you do for housing? What would you eat? How would you stay warm? When will you need new shoes? How will you make them? How many hours a day would you work and how many hours would your rest or have fun? Its a pretty grim scenario. With the possibility of trade, you can have and consume things you do not (or cannot) produce. Produce what you are best at – why do anything else? Professional drug dealers are not junkies; they are businessmen. People who dont own a car can be employed to build roads. Trade to get the things you want. One of the truly great things about trading is that both parties end up better off – a win-win situation. No one is forced to trade. The incentive to trade is that the things you get are worth more to you (marginal benefit) than the things you give up (marginal cost). What constitutes a fair trade? In economi

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