Tuesday, April 22, 2008
kays! chengxi is here to help you guys understand econs better! however, i cannot guarantee that my method will work with everyone ^^
ChengXi's Econs Tutorial! Revision 2!
Firstly, the definitions!
The absolute advantage DOES NOT require comparison between different jobs AT ALL! it is the comparison between the same job but different person. for eg. ted can wax 4 cars a day or wash 12 cars a day. tom can wax 3 cars a day or wash 6 cars a day. who has the abs adv of waxing cars? of washing cars?
Ted will have the abs adv of waxing cars as he can wax more cars then tom when given the same amount time.
Ted will have the abs adv of washing cars as he can wash more cars then tom when given the same amount of time.
*revision 2*
to make it easier.
Ted wax 4 cars a day
Tom wax 3 cars a day
Ted owns Tom
Ted washes 12 cars a day
Tom washes 6 cars a day
Ted owns Tom again
/end of revision/
so now, you guys can understand? (:
let's move on to another one...
opportunity cost.
it is basically the ratio of one job is to another of the SAME PERSON.
u compare between the 2 jobs of ted only!
for eg.
ted wax 4 cars/day, wash 12 cars/day
tom wax 3 cars/day, wash 6 cars/day
opp cost for ted.
1 wax -> 3 wash
1 wash -> 1/3 wax
opp cost for tom.
1 wax -> 2 wash
1 wash -> 1/2 wax
now, this is always used to find out when they ask for comparative advantage.
who has a comp adv for waxing cars? for washing cars?
TOM will have the comp adv for waxing cars.
why? cos he loses less compared to ted in waxing cars!
ted loses the OPPORTUNITY to wash 3 cars when he wax 1 car.
however, tom only loses the opportunity to wash 2 cars when he wax 1 car.
in short, for everytime they wax ONE car, ted loses 3 wash, while tom only loses 2 wash.
who has the comp adv for washing cars?
the answer is ted!
he only loses 1/3 wax for every car he washes.
but, tom loses 1/2 wax for every car he washes!
in short, compare the ratios in comparative advantage, just the numbers!
next one would be the question of the day where alot ppl dont understand...
RUSH 3 ORDERS OF WAXING
this means that, the boss of those 2, ted and tom, want them to 'chiong' 3 waxes before washing.
meaning, both of them have to wax a car at least once, and either of them have to do it 2 times.
so, it will be something like..
Ted wax 1, wash ? -> unknown yet
Tom wax 2, wash ?
OR
Ted wax 2, wash ?
Tom wax 1, wash ?
as long as the total of the wax is 3, they can do the washing!
now is to calculate the wash numbers and determine which is the best, ted wax 2 or tom wax 2.
IF
ted wax 1, wash would be 12-(1 x 3)
the 12 is the max number of cars he can wash everyday without waxing at all
the 3 is because he loses 3 wash for every car he wax!
outcome -> Ted wax 1, wash 9
tom wax 2, wash would be 6-(2 x 2)
the 6 is the max number of cars he can wash everyday without waxing at all
the first "2" is the number of waxing he does
the second "2" is because he loses 2 wash for every car he wax.
outcome -> Tom wax 2, wash 2
to determine the effectiveness, you have to total up the amount!
total -> wax 3, wash 11
dont be too happy yet! u need to do it another time! why, u ask? because there's another posible result!
which is, ted wax 2 and tom wax 1! the outcome will be totally different! i will leave u to try this out!
the outcome is ted wax 2, wash 6. tom wax 1, wash 4. TOTAL wax 3, wash 10
to determine, compare the 2 results! you will see that the latter has a wash lesser than the first one! which means, the first is more effective than the latter!
last but not least, specialisation
this means that one person only do ONE job.
eg.
Ted does only waxing, no washing and Tom does only washing, no waxing.
OR
Ted does only washing, no waxing and Tom does only waxing, no washing!
the first one...
Ted Wax: 0, Wash: 12
Tom Wax: 3, Wash: 0
Total Wax 3, Wash 12
second one...
Ted Wax: 4, Wash 0
Tom Wax: 0, Wash 6
Total Wax: 4, Wash 6
in this case, comparing the second to the first, you gain ONE wax, but you lose SIX washes. to determine whether which is the better way, price is needed to be in consideration. however, we will not go too deep into it as it is under advanced econs.
most likely, 6 washes cost more than 1 wax, which in turn, means that the FIRST produce better results then the second one!
i think that's all to the tutorial! for the curves, teaching online not easy at all... i'll find time to help you all in school then! ^^
thx for all your time and attention! class dismissed!!
credits to ronny for suggesting that i post this!
and to myself for using the time to write all these!
and to everyone for reading this! ^^ cheers!
extra: PEOPLE WHO ARE GROUP LEADERS FOR THE SE PROJECT 1 PLEASE EMAIL ME OR TELL ME PERSONALLY IN SCHOOL WHO ARE YOUR MEMBERS? WHAT ARE THEIR JOBS? WHAT'S YOUR FIRST 3 PREFERENCES OF SEs YOU WANT TO INTERVIEW! I'LL NEED IT ASAP! THX! ^^
We Loved3:28 PM
April 2008 past