CH3 Ricardo Model student

CH3 Ricardo Model student - ECO369 International Economic...

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ECO369 International Economic Issues Lecture Outline GVSU, Wei Sun Chapter 3. Ricardo Model I. More Assumptions for Trade Models A. More Assumptions for both Ricardo and Heckscher-Ohlin (HO) Models B. More Assumptions for Ricardo Model II. Basis of Ricardo Model – Comparative Advantage A. A Numerical Example of the Ricardo Model Suppose it takes a worker in country A 3 hours to produce a unit of soybean, and 6 hours to produce a unit of textile. It takes a worker in country B 12 hours to produce a unit a soybean and 8 hours to produce a unit of textile. That is, you are given the following Unit Labor Requirements: Hours per unit A B Soybean 3 12 Textile 6 8 a) Which country has an absolute advantage in producing soybean? Textile? Absolute Advantage – 1
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b) Which country has a comparative advantage in producing soybean? Textile? Comparative Advantage – c) If they were to specialize and trade, which country will specialize in which good? Which country will export which good and import which good?
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This note was uploaded on 12/14/2010 for the course ECO 369 taught by Professor Sun during the Fall '10 term at Grand Valley State University.

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CH3 Ricardo Model student - ECO369 International Economic...

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