10/24/11

• Price = what is traded off
• Who's "more efficient" at making each good?
• really means who incurs the smaller trade-off
• What is sacrificed?
• (10 wines 5 cameras) Rochester: Price of 1 camera = 2 wines  Price of 1 wine = 1/2 camera
• (3 wines 4 cameras) Cornell: Price of 1 camera = 3/4 wine  Price of 1 wine = 4/3 camera
• Therefore, Rochester has a "comparative advantage" in making wine over Cornell
• comparative advantage = ability to produce something giving up less resources than other producers
• No producer can have a comparative advantage in producing everything
• Cornell has a comparative advantage in making cameras over Rochester
•    You pay for your imports with your exports always
• What matters in trade is the relative price differences within a country
• Policies that restrict trade make people poor
• Two ways for states to get rich
• have almost everyone working
• improve the productivity of every worker in the state
• the better option
• Why are there less jobs today
• technology replaces workers
• many products need technological production
• low paying jobs fill up fast or get offshored