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Social Studies skills: Difference between revisions
→Comparative Advantage
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<pre>''If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it off them with some part of the produce of our own industry employed in a way in which we have some advantage. The general industry of the country, being always in proportion to the capital which employs it, will not thereby be diminished ... but only left to find out the way in which it can be employed with the greatest advantage.'' (Book IV, Section ii, 12)</pre> </div> | <pre>''If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it off them with some part of the produce of our own industry employed in a way in which we have some advantage. The general industry of the country, being always in proportion to the capital which employs it, will not thereby be diminished ... but only left to find out the way in which it can be employed with the greatest advantage.'' (Book IV, Section ii, 12)</pre> </div> | ||
** Comparative advantage means concentrating on what your country is good at making/doing in order to get what other countries are better at making/doing."</pre></div> | ** Comparative advantage means concentrating on what your country is good at making/doing in order to get what other countries are better at making/doing."</pre></div> | ||
** early 19th century British economist David Ricardo | ** early 19th century British economist David Ricardo (1772-1823): | ||
*** argued for specialization as basis for national wealth and increased trade | *** argued for specialization as basis for national wealth and increased trade | ||
*** = laissez-faire, free-trade | *** = laissez-faire, free-trade | ||
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* see also | * see also | ||
** [https://www.cairn.info/revue-cahiers-d-economie-politique-1-2015-2-page-203.htm The discovery of the comparative advantage theory (on James Mill, 1821)] | ** [https://www.cairn.info/revue-cahiers-d-economie-politique-1-2015-2-page-203.htm The discovery of the comparative advantage theory (on James Mill, 1821)] | ||
===Opportunity Cost=== | ===Opportunity Cost=== | ||
* Definition: The value of the next best choice one had when making a decision. | * Definition: The value of the next best choice one had when making a decision. | ||