10/31/11

• Global Trade
• More commodities can be made in different places
• Productivity is more efficient and faster
• Beneficial environmental impacts terms of land usage
• What makes trade beneficial
• Smithian notions
• Specialization results in less time spent learning and more time spent producing/resting
• Specialization involves more time devoted to the specific field
• Specialization allows an extended market
• Recardian notions
• Comparative advantage lowers production costs
• Transactions Costs
• definition: cost of negotiating costs and agreements
• 3 main costs
• Physical
• Insurance of Opportunity
• what is given up for what is chosen
• Interference 

week 10/24-28 reading

• Mike Rowe from Dirty Jobs on roadkill, castrating animals and how “ necessary” labor is belittled by our American attitudes. Keep this in mind when you hear claims that “everyone should go to college.”
•  not everyone is tailored for college
• specialization indicates that every career can be necessary
• Long Live Roquefort
• people value roquefort as much as (if not more than) the imposed 300% tariff
• the substantially sized tariff is a method that is akin to the old mercantalist methods of restricting free trade
• Who Wants Their Kid To Grow Up to Roll Cigars? 
• richness is subjective
• in some economies, a bad job is better than none

EWOT week 10/24 -10/28

I can make 8 free-throws in a row and 24 lay-ups in a row. A friend of mine can only make 3 free-throws in a row and 6 lay-ups in a row. In terms of basketball prowess, I can definitely make more free-throws and lay-ups than said friend.  However, from an economic standpoint, my friend has a comparative advantage in making free-throws over me as the data below shows.

• Price of 1 Lay-up
• Me: 1/3 free-throw
• My friend: 1/2 free-throw
• Price of 1 Free-throw
• Me: 3 lay-ups
• My friend: 2 lay-ups 

10/28/11

• Trade Surpluses do NOT create jobs
• Imports are paid for via exports

10/26/11

• Mechanization/outsourcing really only occurs with the inferior jobs
• Every month in the US, 4 million jobs are created countered by 4 million being destroyed
• Self-sufficiency is the road to poverty
• Trade doesn't cause jobs; it merely changes the type of jobs in the industry
• Trade Deficit = imports > exports
• Trade Deficit = exports > imports
• Myth: America doesn't make anything anymore
• jobs must complement capital
• labor and capital can't be substitutes
• machines can't do everything labor can do (unless the singularity happens)

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 

10/21

• Trade
• creates wealth although nothing new is created
• non-technical form of production
• enables people to know what they value
• Efficiency
• utilization of your stock of resources to get more done faster
• Production Possibilities Frontier
• all possible combinations of goods that can be produced given the following: level of education, amount of resources, and access to technology
• Properties
• All points on/in the curve is achievable
• Absolute advantage: more efficient(larger number) on x-axis ,or y-axis, or both
• All points to the NE are NOT achievable
• Points on the PPF are "productively efficient"
• economically efficient is not just producing at lowest cost but also producing what the people want
• Slope
• captures trade-offs between amount of the good on x-axis and amount of the good on y-axis
• Change in Slope
• "Law of Diminishing Returns"(law of increasing opportunity costs)
• next produced good is more costly than the previous one
• ex: teachers taken from education field into medical field results in worse quality of doctors and each teacher that the education field loses was better than the last
• Economic Growth
• 3 factors
• Resources 
• Technology
• Trade
• Comparative Advantage
• ex: two groups that only make the same two products
• Rochester: 10 bottles wine/yr 5 cameras/yr
• Cornell: 5 bottles wine/yr 4 cameras/yr