经济学比较优势 英文

3-11



Arbitrage (trade) is possible – buy cloth in ROW for 0.67W/C and sell in the US for 2W/C Eventually, the world price for cloth will be established between 0.67 and 2W/C. Suppose it is 1W/C And the world price of wheat between 0.5 and 1.5 C/W


Two ways to show each country’s ability to produce
Quantity of output per labour hour Labour hours needed to produce a unit of output

3-3
Adam Smith’s Example Absolute Advantage
3-4



The US has higher productivity on wheat and hence an absolute advantage in wheat What about the rest of the world? What are the changes in world production if 1 hr of labour is shifted from cloth to wheat in the US? From wheat to cloth in the rest of the world?
3-6
Ricardo’s theory of comparative advantage


What if a country has absolute advantage in both products? Will this country benefit from trade? The principle of the comparative advantage
US: -0.25 cloth; +0.5 wheat ROW: +1 cloth; -0.4 wheat World: +.75 cloth; +0.1 wheat


Global production efficiency is increased due to trade
3-5
Ricardo’s Example: Comparative Advantage


Production Possibility Curve
3-2
Adam Smith’s theory of the absolute advantage

Assumptions:
Two countries – the US and the rest of the world Two products – wheat and cloth Each product uses one resource – labour

3-7

Ricardo focused on labor productivity (or resource productivity more generally) for different products in different countries Basis for trade: Relative differences in labor (resource) productivity.

3-8

ቤተ መጻሕፍቲ ባይዱ

Which country has an absolute advantage in wheat? In cloth? The opportunity cost (price) of cloth in the US is the amount of wheat that we have to give up in order to produce a unit of cloth The opportunity cost of cloth is 2 W/C [0.5/0.25] or [4/2]
Wheat in US 0.5 C/W [.25/.5] or [2/4] Wheat in ROW 1.5 C/W [1/.67] or [1.5/1]


Which product is cheaper in the US? In ROW?
3-10
Ricardo’s Example: No-Trade Relative Prices
Why Everybody Trades: Comparative Advantage
McGraw-Hill/Irwin
Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Contents
Mercantilism Absolute Advantage Comparative Advantage
A country will EXPORT the goods that it can produce at a LOWER OPPORTUNITY COST and IMPORT the goods that it would otherwise produce at a HIGHER OPPORTUNITY COST
3-9


The opportunity cost (price) of 1 unit of cloth in ROW is the amount of wheat that they have to give up, The opportunity cost of cloth in ROW is 0.67W/C [0.67/1]or [1/1.5] What about the prices of wheat?
3-12

Gains from trade: