lec03-eco101-11

lec03-eco101-11 - InternationalTrade Lecture3 c...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon

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

View Full DocumentRight Arrow Icon

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

View Full DocumentRight Arrow Icon

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

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

Unformatted text preview: InternationalTrade Lecture3 c Marc-AndreasMuendler UniversityofCalifornia,SanDiego September29,2011 3.MultipleGoodsandMultipleFactorsofProduction Econ101, c M.Muendler GainsfromTradeintheRicardianModel Thegainsfromtradecanbeunderstoodindifferentways Tradeislikeanadditionalproductiontechnology (tradeallowstotransformdomesticexportsintoforeignimports) Tradeexpandstheconsumptionpossibilityfrontierbeyondthe productionpossibilityfrontier (tradeallowstoexchangedomesticgoodsontheworldmarketat betterrelativepricesthanonthedomesticmarket) 3.MultipleGoodsandMultipleFactorsofProduction Econ101, c M.Muendler ProductionPossibilityFrontiersandtheTradePattern Q C ,Q C Home and Foreign cheese production H o m e a n d F o r e ig n w in e p r o d u c t io n L/ a LC L/ a LW a LC / a LW L / a * * LC L / a * * LW a * LC / a * LW PP C W / in world trade equilibrium 1 PP C W / 1 PP C W / 1 Q W ,Q W * * 3.MultipleGoodsandMultipleFactorsofProduction Econ101, c M.Muendler MisconceptionsaboutComparativeAdvantage Misconception1:Freetradeisonlybeneficialifacountryisproduc- tiveenoughtocompete. No.Tradeisbeneficialifthereisacomparativeadvantage.Absolute disadvantagedoesnotmatter. Misconception2:Freetradeisunfairandhurtsifitisbasedinlow- wagecompetition. No.Tradeisbeneficialifthereisacomparativeadvantage.Absolute wagesdonotmatter. 3.MultipleGoodsandMultipleFactorsofProduction Econ101, c M.Muendler MisconceptionsaboutComparativeAdvantage Misconception3:Freetradeworsensthelotofworkersinlow-wage countries.countries....
View Full Document

Page1 / 16

lec03-eco101-11 - InternationalTrade Lecture3 c...

This preview shows document pages 1 - 6. Sign up to view the full document.

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