Chapter Nine

Chapter Nine - PRINCIPLES of MICROECONOMICS by N. Gregory...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
PRINCIPLES of MICROECONOMICS by N. Gregory Mankiw (4 th Edition) Chapter Nine Outline CHAPTER NINE – APPLICATION: INTERNATIONAL TRADE The Determinants of Trade The world price and comparative advantage - World price – the price of a good that prevails in the world market for that good o If world price is higher than domestic price, country will export o If world price is lower than domestic price, country will import - Comparing world price and domestic price helps determine comparative advantage The Winners and Losers from Trade The Gains and Losses of an Exporting Country - Domestic equilibrium price is below the world price - When a country allows trade and becomes an exporter of a good, domestic producers of the good are better off, and domestic consumers of the good are worse off - Trade raises the economic well-being of a nation in the sense that the gains of the winners exceed the losses of the losers The Gains and Losses of an Importing Country - Domestic price before trade is above the world price - When a country allows trade and becomes an importer of a good, domestic consumers are better off, and domestic producers of the good are worse off - Trade raises the economic well-being of a nation in the sense that the gains of the winners
Background image of page 1

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

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/08/2008 for the course ECON 101 taught by Professor Idson during the Spring '08 term at BU.

Page1 / 3

Chapter Nine - PRINCIPLES of MICROECONOMICS by N. Gregory...

This preview shows document pages 1 - 2. Sign up to view the full document.

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