Chapter 3 was both interesting and at the same time very accessible and simple to read and understand. The concept of the production possibilities frontier logically builds off of the idea of trade-offs discussed earlier. The example of the farmer and rancher clearly illustrates both the practical use of this tool as well as the real-world phenomenon of gains from specialization and trade. It is logical that everyone should focus on what they are best at to increase efficiency, and it is also logical that an increase in efficiency will lead to an increase in production that is beneficial for everyone. However, what was somewhat surprising is the number of possible ways that these additional resources can be distributed through trade--that is; that trade can occur at any ratio between that of the producers' opportunity costs. It is also logical that it is relatively irrelevant that some people (or countries) are better than others at everything. In other words, it was very reasonable to see that an absolute advantage does not preclude gains from trade. The concept of comparative advantage was also well-explained and followed logically from earlier discussions of opportunity cost. These concepts were combined and explained clearly with the examples of Tiger Woods' lawn and US-Japanese trade. While this is a simple analysis of what is in fact a more complicated issue, it is interesting to see that trade is often in general beneficial to everyone.
I have no pressing questions regarding this material.
Difficulty: 1/3
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