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Lecture_3_post - 9/10/2008 Absolute Advantage The natural...

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9/10/2008 1 Lecture 3 Economics 3610 Cornell University Fall 2008 Absolute Advantage The natural advantages which one country has over another in producing particular commodities are sometimes so great that it is acknowledged by all the world to be in vain to struggle with them. By means of glasses hotbeds and hot walls very good grapes By means of glasses, hotbeds, and hot walls, very good grapes can be raised in Scotland, and very good wine too can be made of them at about thirty times the expence for which at least equally good can be brought from foreign countries. ‐‐ Adam Smith, Wealth of Nations Comparative Advantage England exported cloth in exchange for wine, because, by doing so her industry was rendered more productive to her; she had more cloth and wine than if she had manufactured both for herself; and Portugal imported cloth and exported wine, because the industry of Portugal could be more beneficially employed for both countries in providing wine. It would therefore be advantageous for [Portugal] to export
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This note was uploaded on 12/25/2008 for the course ECON 361 taught by Professor Besh during the Fall '08 term at Cornell.

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Lecture_3_post - 9/10/2008 Absolute Advantage The natural...

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