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Unformatted text preview: I nt’l Econ Notes 4/1/09 • Global financial crisis impact on trade piece in Economist read it • MPL captures changes in productivity • Key concepts from Lecture 1 • Elements of a general equilibrium model o Tech Production function Marginal product of labor Production possibility frontier o Resources Resource constraint o Preferences Indifference curves • Trade, specialization, and national welfare o Absolute advantage, comparative advantage o Gains from trade o Terms of trade the price of a country’s exports over the price of a country’s imports What if you compete and buy from a country? • Perfect Competition means price= marginal cost o China: Pc= price of clothing on world mkt o MPLc= marginal product of labor in clothing for China o W= wage in China o MC is cost of producing an additional unit of output Equals (the amount of labor that is needed to produce an extra unit of output)*(the cost of labor) o MPL=(delta output)/(delta labor) o 1/MPL= (delta labor)/ (delta output)...
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This note was uploaded on 12/27/2009 for the course IRPS IRCO 403 taught by Professor Gordonhansonandtakeohoshi during the Spring '09 term at UCSD.
- Spring '09