ECON2010 - Exam Two

by moving goods from people who value goods less to people who value the more

How does trade create value

absolute advantage

ability to produce the same good using fewer inputs than another producer

Production Possibility Frontier

all the combinations of goods that a country can produce give its productivity and supply of inputs

comparative advantage

ability to produce a good or service at a lower opportunity cost than another producer

Specialization increases productivity because it increases knowledge

What does specialization do to productivity? Why?

(New Value - Original Value)/Original Value

what is the Percentage Increase formula