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    The

    No Cash on the TablePrinciple

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    The No Cash on the Table Principle

    economists often say that we dont expectthere to be cash on the table.

    drive down prices, andsometimes to drive up costs

    economic protsare dissipated

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    there must not be barriers to entry

    !hen you thin" you seecash on the table

    The No Cash on the Table Principle

    a.# presence of barriers

    b.# youre mista"enc.# dise$uilibrium

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    %utually &enecial Trade

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    %utually &enecial Trade

    transaction that benets both 'or all#

    parties to the transaction.

    (ne)ciency

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    *peciali+ation -ivision of abor

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    three main reasons that division of labor increaseproductivity/

    0 !or"ers 1et better at a tas" when they focusexclusivelyon that one tas"2 they increase their s"ill at the tas"2

    0 They save time throu1h not havin1 to 1o from tas" to tas"several times a day2

    0 They are more li"ely to discover new techni$ues anddevicesfor faster or better

    completion of their tas".

    0 They can ta"e advanta1e of innate di3erences in talentsor propensities for di3erent

    tas"s.

    *peciali+ation -ivision of abor

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    Comparative 4dvanta1e

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    The basic idea of comparative advanta1e/

    that 1ainsfrom trade resultin1 from division of laborcan be available even if one person 'or country# isbetterat producin1 both 1oods.

    Comparative 4dvanta1e

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    Comparative 4dvanta1e

    !hen do 51ains from trades exist6

    4bsolute advanta1e Comparative advanta1e

    (mportance of comparative advanta1e6

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    Normative versus Positive

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    Two di3erent types of analysis/

    Normative versus Positive

    Positive

    Normative

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    13/147)ciency

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