H22ComparativeAdvantage

H22ComparativeAdvantage - 1 International Trade...

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Unformatted text preview: 1 International Trade International Trade Why people benefit from international trade increased competition reduced costs specialization 85 No Trade No Trade Country A’s PPF 0 Clothes and 400 Tech 200 Clothes and 0 Tech Clothes Tech 200 400 Country A’s PPF linear combination of (200,0) and (0,400) Output Per Worker Tech Clothes Country A Country B 4 1 2 1 Population # of Workers 100 150 50 300 85 Country B’s PPF 0 Clothes and 150 Tech 150 Clothes and 0 Tech No Trade No Trade Country B’s PPF Clothes Tech 150 150 linear combination of (150,0) and (0,150) Output Per Worker Tech Clothes Country A Country B 4 1 2 1 Population # of Workers 100 150 75 75 85 2 Output Per Worker Tech Clothes Country A Country B 4 1 2 1 Trade Trade absolute advantage a country is more efficient in producing a good in comparison with another country X X 85 comparative advantage a country can produce one good more efficiently than another good in comparison with another country...
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H22ComparativeAdvantage - 1 International Trade...

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