Comparative advantage definition and worked example (video) |
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Comparative advantage definition and worked example (video)
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Hey Sal! That was really interesting, but I have a question....Is it necessary that you would always get a financial gain when you are able to accomplish a point anywhere outside the PPF? Because I do not think so. Let's take the dinnerware market, and let's assume that 1 plate costs 1 Rs. and one cup costs 1 Rs too. So if Charlie focused just on making cups, he would earn Rs.30 (At 6:35). If Patty focused just on making plates, she would earn Rs.30 too (At 6:42). And told in the video, let's say that they both are going in for a trade and each will have 15 cups and 15 plates, resulting in Rs.30. So if there is no financial gain, then what is the purpose of going outside The Production Possibilities Frontier, in such kind of situations?? And even if the plates maybe cost more than the cups, would it be possible to expect something of more value to be given in exchange for something of less value. Like if the cups cost Rs.1 and the plates cost Rs.2, Charlie would make a financial income of Rs.30 and Patty would earn Rs.60 (not considering the profit and loss, and assuming ceteris paribus). If at all they decide to go for a trade where you get one cup for one plate, they would each make Rs.45. Of course that would be a gain for Charlie, but would Patty agree to this trade with Rs.15 loss? So what's the whole point?? |
6:35). If Patty focused just on making plates, she would earn Rs.30 too (At 【本文地址】
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