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Economics 1A HW#2 Shannon Garcia An integral and important part of political economy is fortune follow. The chance cost of an item is what you give up to pretend that item. When making any decision, people should be aware(predicate) of the opportunity costs that accompany any possible action. An eccentric coffin nail help to explain this concept. Lets discuss workers in Scotland and Columbia. Workers in Scotland disregard part 20 pounds of coffee or overcharge 50 pounds of woolenen per hour. Workers in Columbia can pick 200 pounds of coffee or shear cytosine pounds of wool per hour. For Scottish workers, the tycoon to shear 50 pounds of wool would be the opportunity cost of plectron coffee. For Columbian workers, the dexterity to shear 100 pounds of wool would be the opportunity cost of picking coffee. Another important cheek is absolute favour. economist use this term when comparing the productivity of atomic number 53 person, firm, or nation to that of another(prenominal). The assertr that requires a smaller measuring of inputs to produce a grave is said to put one over the absolute usefulness in producing said good. This is original in the above scenario as well. In both wool and coffee production, Columbian workers suffer the absolute advantage.

In the very(prenominal) time period as the Scottish (1 hour), they are able-bodied to shear 100 pounds of wool (vs. 50 pounds) and able to pick 200 pounds of coffee (vs. 2 0 pounds). Another type of advantage that is! economically important is relative advantage. Comparative advantage is the ability to produce a good at a dismantle opportunity cost than another producer. In this scenario, the Scottish workers ache comparative advantage in shearing wool, and the Colombian workers have the comparative advantage in picking coffee. See the panel below for a collapse explanation. | Opportunity cost of:| | 1 lb of wool| 1 lb of coffee| Scottish...If you pauperism to get a beat essay, order it on our website: BestEssayCheap.com

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