Questions:
1. What is comparative advantage?
2. Do you have to be better at something to have a comparative advantage?
3. Why do you buy your clothes instead of make them yourself?
4. What is positive economics?
5. What is normative economics?
Hi Dr Gale
ReplyDelete1. Comparative advantage: is the economic theory about the potential gains from trade for individuals, firms and nations. A person has a comparative advantage at producing something if he can produce it at lower cost than anyone else. Someone's opportunity cost is lower than your opportunity cost.
2. No, having have a comparative advantage is not the same as being the best at something. In fact, someone can be completely unskilled at doing something, yet still have a comparative advantage at doing it. the most important is the opportunity cost.
3. Its easy to buy clothes from the market instead of making them them by yourself, purchasing the fabrics, colors designs etc. The most important thing TIME nowadays no one have time to invest in all this, its easy to go market ad grab what ever u like because you have a low opportunity cost.
4. Positive Economics: is the branch of economics that concerns the description and explanation of economics phenomena. It focuses on facts and cause and fact behavioural relationships and includes the development and testing of economics theories. Facts are true and false.
5. Normative Economics: is a part of economics that expresses value or normative judgements about the economic fairness or what the outcome of the economy or goals of public policy ought to be. Values can be Good or Bad.
Hello, Dr. Gale
ReplyDelete1) Comparative Advantage is the economic theory about the potential gains from trade for individuals, firms and nations. A person has a comparative advantage at producing something if he can produce it at a lower cost than else. Someone's opportunity cost is lower than your opportunity cost.
2) Actually you don't have to be better at something to have a comparative advantage. For example, if you're a college student and a shop offers you a job that pays 500 SR per hour, which means you would get around 3000 SR per day. What would you choose, to keep studying or getting the job offer? Of course you'd choose the job offer because studying is a waste of time when you compare it to the job offer. So in the end it's not about skills, it's about what's better for your advantage or in other words, what you'd benefit from more. Time is valuable.
3) Because when you make your own clothes you have to get the fabric you want, then you have to find someone to sew them all together for you, etc... meaning you'd take A LOT of time. On the other hand, buying your clothes may take you minutes, meaning you'd save a lot of time.
4) It is the branch that concerns the description and explanation of economic phenomena. It mainly focuses on facts and cause-and-effect behavioral relationships and includes the development and testing of the economic theories.
5) It is the part of economics that expresses value or (normative judgments) about economic fairness or what the outcome of the economy or goals of public policy ought to be.