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What is specialization?
Why would a country specialize?
When a country produces only one good rather than multiple
Because there are gains from trade when countries specialize
If choices are necessary when resources are scarce... define a resource that could be considered scarce
money, land, labor (employees), capital, human capital (knowledge, skills, capabilities)
What is a PPF?
What does it help calculate/measure?
It helps measure the opportunity cost of producing a single good
What is opportunity cost?
What must be given up in order to get a good
How do you calculate the average?
sum of values/# of values
What does it mean when an economy is in autarky
That economy does not participate in trade
They produce all their own goods and do not specialize in production
What is Equilibrium?
Draw an example of equilibrium on a supply+demand graph
An economic situation which no individual would be better off doing something else.
(maximum amount of production + consumption)
Name three of the five sources of comparative advantage
Factor abundance
Factor intensity
Differences in climate
Differences in factor endowments
Differences in Technology
How do you calculate the slope of a curve?
What is hyperglobalization?
Extremely high levels of trade
When is an economy considered efficient?
when it takes all opportunities to make some people better off without making others worse off
What is comparative advantage?
When one country has a lower opportunity cost in production of a certain good
1 banana costs 0.67 avocados
1 avocado costs 1.5 bananas
How do you calculate a percentage change?
=(new-old)/old
How much of your total grade is the first exam?
20%
What are the two categories in which an economy can be efficient?
1.) Efficient in production
2.) Efficient in allocation
What is absolute advantage?
When a country can produce more output per worker compared to another
If a country has an absolute advantage in two goods of production, should they consider trade? should they remain in autarky?
They should consider trade because it may allow them to consume higher amounts of both goods
if the ages of cousins in a family consist of 4,12,16,7,9, and 2, what is the average and median age?
Average= 8.33
Median= 8
What is the trade-off with efficiency?
Equity
What is the difference between principle #8 and #10?
#8. Government intervenes to improve social warfare
#10. Govt. intervenes to regulate productive capacity
The USA can either produce 10 tons of lumber or 1000 footballs. If they want to consume 600 footballs, what is the maximum amount of lumber they could consume in autarky.
4 tons of lumber
if the USA can produce either 1000 units of food or 500 units of clothes and Tokyo can produce either 500 units of food and 200 units of clothes, who has comparative advantage in production of either good?
USA has comparative advantage in production of clothes
Tokyo has comparative advantage in production of Food
If a firm produces 4,300 units in 2022 and 5600 units in 2023, what was the percentage change of production?
30.23% increase