Lecture4 - Lecture 4 Wrap up the Ricardian model....

Info iconThis preview shows pages 1–8. Sign up to view the full content.

View Full Document Right Arrow Icon
Lecture 4 Wrap up the Ricardian model. Introduction of the specific factors models.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Solving for International Prices Figure 2.9
Background image of page 2
Solving for International Prices Home Export Supply Curve Combination of Pw/Pc and exports of wheat from the Home country. We put Pw/Pc on the Y-axis and the amount of wheat on the X-axis.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Home Export Supply Curve The flat portion of the export supply curve is a special feature of the Ricardian model. The PPF is a straight line. Production can occur anywhere along the PPF as workers shift between industries. At prices above ½, production is the same but consumption changes, rising above point A.
Background image of page 4
Foreign Import Demand Similar analysis from the point of view of Foreign country The no-trade equilibrium in Foreign, with a relative price of 1, is zero imports, A* and A*’. Production can shift from point A, at a price of 1, as workers move between industries: If workers all shift to cloth. Foreign imports 50 bushels of wheat, B* and B*’. This gives us the import demand curve.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Solving for International Prices Figure 2.10
Background image of page 6
Solving for International Prices International Trade Equilibrium We need to put the Home export supply together with the
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 8
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 20

Lecture4 - Lecture 4 Wrap up the Ricardian model....

This preview shows document pages 1 - 8. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online