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| Making something using fewer resources then other producers |
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| The individual with the lowest opt. cost of producing should specialize in producing that out put. Everyone is better off because of specialization |
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Specializing in the task for which you have the lower opt. cost.
Absolute Adv. focuses on who uses the fewest resources, comparative adv. focuses on what else those resources produce. |
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| breaking the down the production of a good in to seperate tasks. Ex. Mcdonalds |
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| Allows the intro of more sophisticated production techniques. Techniques that would not make sense on a smaller scaler. Ex. Large milkshake machine. |
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| Merchandising Trade Balance |
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| Limits on the quantity of a particular good that can be imported from a country |
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| One whose preferences lie in the middle of all voter preferences |
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- will dominate other choices
- political candidates appeal to median voter
- elected officials cater to special interests rather than the serve the interests of the public |
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| stance adopted by voter when they realize that the cost of understanding and voting on a particular issue exceeds the benefits. |
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Involves widespread costs and benefits, has a positive impact on economy.
Ex. National Defense, Cancer Research |
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| Special Interest Legislation |
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Benefits are concentrated but costs are widespread, b/c TB > TC
- Pork Barreling Spending |
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Widespread beneifts, concentrated costs.
Tough time getting approved b/c widespread group the benefits usually is rational ignorant. Ex. Lawsuit reform |
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| Competing Interest Legislation |
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Concentrated cost and benefits.
Labor unions and employees. Intense political battles, parties choose one side or the other. |
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| Public Tendency 1- Politicians often take positions in the middle |
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-Played btw 40 yrd lines
- Middle positions win policies and middle position candidates tend to win elections |
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| Public Tendency 2- Distribution of Costs and Benefits |
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Distribution of costs and benefits.
Special interest, Competing Interest, Traditional public good, Populist issues |
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| Public Tendency 3- Importance of intense support of party base |
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| Public Tendency 4- Rational Citizen Ignorance |
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| To much to know all that federal and state governments do |
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| Public Tendency 5- Bureaucracies will defend their budget |
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| Bureaucracies want to grow, not make profit b/c the executive of bureaucracies make more money when there section is bigger |
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| Public Tendency 6- Rent Seeking/ Rent Defending |
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| Try to obtain rent (profit) either in the mkrt process, or governmental process |
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| Public Tendency 7- The benefits of federalism |
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Federalism is wisely carrying out gov actions at various levels.
1. Laboratories of experimentation.
2. Reduction of risk.
3. Voting with your feet. |
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| Public Tendency 8- Will Subsidarity be upheld |
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| National Defense Argument |
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| Need protection from import competition b/c their output is vital for national defense |
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| Emerging domestic industries need protection from foreign competition. Until firms grow enough to become competitive. |
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| Exporters may be able to sell the good for less overseas. |
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| Protect US jobs and wage levels. Countries retaliate by restricting imports to save jobs |
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| Domestic industry is in jeopardy of closing b/c of lower priced imports |
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-No firm Dominates
-A lot of firms
-Differentiated product
-Price Maker
-Easy entry |
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| HAving an economy that is developing its production capacity to produce more every year, resulting in higher living standards. |
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| Diffusion of New Products |
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Short term- price is high and item is generally limited to wealthy
- Long term- price declines and product is available to virtually all |
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| If you produce where MR>MC you not a a profit maximizing firm (there is still profit to be made. If you produce where MR |
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- Large # of buyers and seller
- homo products
- mkrt participants are fully informed
- easy entry |
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