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367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
367 lecture 2
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367 lecture 2

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Opportunity Costs …

Opportunity Costs
PPC
Comparative Advantage

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Transcript

  • 1. HEN 368Health Economics
  • 2. Yabut
  • 3. Opportunity CostsProduction Possibilities Curve Comparative Advantage Comparative Advantage Comparative Advantage
  • 4. IntentResultResultResult
  • 5. Fell Pushed JumpedResult the sameResult the same
  • 6. Why are you here?
  • 7. Opportunity Cost Cost Highest Valued
  • 8. Possibilities Curve Curve Curve
  • 9. Production Possibilities Frontier
  • 10. iPods to iPads 3 to 1iPads to iPods 1 to 3
  • 11. iPods: 900,000 iPads: 0 iPods: 600,000 iPads: 100,000 iPods: 300,000 iPads: 200,000 iPods: 0 iPads: 300,000
  • 12. Bows Out Due toOpportunity Costs
  • 13. Innovation that onlyhelps iPad production
  • 14. Innovation that helps both.
  • 15. Absolute Advantage Produce more with the same resourcesComparative Advantage Produce at a lower opportunity cost
  • 16. David Ricardo (1772 - 1823) Principles of Political Economy and TaxationComparative Advantage
  • 17. Utopia vs. RealityReality always losesRealistic Alternatives
  • 18. Positive What is Fact NormativeWhat ought to be Values
  • 19. FactsTrue or False ValuesGood or Bad
  • 20. The basis for trade iscomparative advantage, not absolute advantage.
  • 21. No Trade 2 Hooks and 2 Fish 10 Hours - 5 Hours per Fish Total Gale Ali HoursMake a 3 2 5HookCatch 4 1 5a FishTotal 7 3 10Hours
  • 22. With Trade 2 Hooks and 2 Fish 8 Hours - 4 Hours Per Fish Total Gale Ali HoursMake a 2 hooks 6Hook 6 hoursCatch 2 fish 2a Fish 2 hoursTotal 6 2 8Hours
  • 23. Saudi Idaho
  • 24. Saudi Arabia Idaho Dates Potatoes Dates Potatoes 24 0 6 0 20 1 5 5 16 2 4 10 12 3 3 15 8 4 2 20 4 5 1 25 0 6 0 30 Ratios Ratios 24 to 6 6 to 304 Dates for 1 Potato 1/5 Dates for 1 Potato 6 to 24 30 to 61/4 Potato for 1 Date 5 Potatoes for 1 Date
  • 25. Dates Should Idaho and Saudi Trade? 27 Dates Potatoes 24 24 0 20 1 16 2 21 12 3 8 4 18 4 5 0 6 15 Saudi PPF Dates Potatoes 12 6 0 5 5 9 4 10 3 15 6 2 20 Idaho PPF 1 25 3 0 30 0 0 3 6 9 12 15 18 21 24 27 30 Potatoes
  • 26. Internal Dates Potatoes Price Idaho 5 Potatoes 1/5 Date Saudi 1/4 Potato 4 Dates
  • 27. No Trade Dates Potatoes Idaho 3 15 Saudi 12 3 Total 15 18
  • 28. Specialize Dates Potatoes Idaho 0 30 Saudi 24 0 Total 24 30
  • 29. Analysis Dates PotatoesNo Trade 15 18 TotalsSpecialize 24 30 Totals Gain +9 +12
  • 30. Trade Dates Potatoes Idaho 3 to 12 = +9 15California 12 3 to 15 = +12 Total 24 30
  • 31. Dates Should Idaho and Saudi Trade? 27 Idaho 24 gains 9 Dates 21 18 15 Saudi Trade PPF PPF Saudi 12 gains 12 potatoes 9 6 Idaho PPF 3 0 0 3 6 9 12 15 18 21 24 27 30 Potatoes
  • 32. MarketsWhere Buyers and Sellers TradeWhere Buyers and Sellers TradeWhere Buyers and Sellers Trade

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