Absolute advantage vs Comparative advantage
Absolute: faster and more efficient
Individual:
exists when a person can produce more of a certain good/service than someone
else in the same amount of time
National:
when a country can produce more of a good/service than another country in the
same amount of time
Comparative: lower opportunity cost
Individual/
National: exist when an individual or nation can produce a good/service at a
lower opportunity cost than can another individual or nation
Input problems:
The
country or individual that uses the least amount of resources, land or time has
the absolute advantage
Output problems:
The
country or individual that can produce the most has the absolute advantage
The
country that has the lower opportunity cost has the comparative advantage in
that product
Deal
with production
Foreign exchange: buying and selling of currency
Exchange
rate is determined in the foreign currency markets
The
exchange rate is the price of a currency
DO not
try to calculate the exact exchange rate
Milton, I like that you differentiate between input and output problems, but could you clarify the topics a little more? I get a little lost, is it possible if you could include an example equation explaining the difference between the two because they look so darn similar.
ReplyDeletethe notes gave me a relative idea of each of the terms discussed, perhaps in the future it would be more beneficial to go into a more in depth explanation of each of the terms. It would also help to organize the terms in a manner that makes it easier to read and identify what is what. I liked that you broke down absolute advantage into national and individual.
ReplyDelete