国际经济学英文-大卫李嘉图模型

140 120 100 80 60 40 20 0
Cl Y
Z X
Autarky point
0
20
40
60
80
100
120
140
Wh
The China’s Free Trade Outcome
• Before trade, equilibrium point at X • Suppose 1W=1C, a balance trade is 70W to exchange 70C • China specialize in producing cloth , Point Y, exports 70C for 70W. With 50C left and receive 70W • The consumers then could consume at pint Z, outside PPC
Bringing basic diagrams
• Production Possibility Curve (PPC)
• Setting production hours for each country • Production Possibilities Table Page 42
Cl
140 120 100 80 60 40 20 0 0 30 60
Opportunity Cost Theory
• The cost of a commodity is the amount of a second commodity that must be given up to release just enough resources to produce one additional unit of first commodity. • The commodity with lower opportunity cost is the comparative advantage commodity
Topic 2
• Reviewing comparative advantages
• Classical world of David Ricardo • Setting up the Model
• Two extensions
Key Words Today
• • • • • • Factor Constant cost Opportunity cost PPT PPC PTF MRT Autarky Equilibrium Specialization
Wh
The Australian Free Trade Outcome
• Before trade, equilibrium point at A • Suppose 1W=1C, a balance trade is 70W to exchange 70C • Australia specialize in producing wheat , Point B, exports 70W for 70C. With 110W left and receive 70C • The consumers then could consume at pint C, outside PPC
Country
A
Pw/Pc
1
B
C
2
3
D
E
4
5
• Needs to set up world price ratio • When world Price =3,who will export wheat? • Then for number 1, 2, 4 and 5?
Conclusion
• Revealed why countries enter into trade. • With trade, both country better off • Only supply side, no demand side • Based on constant cost. • World price ratio based on assumption Ricardo’s world is not a true trade world!
Autarky Equilibriums
140 120 100 80 60 40 20 0 0 30 60 90 120 150 180
Cl
Autarky point (assumption)
Wh
210
Australia’s autarky equilibrium
Cl
140 120 100 80 60 40 20 0 0 20 40
Autarky point (assumption) Wh
60 80 100 120 140
China’s autarky equilibrium
With Trade ….
Cl
140 120 100 80 60 40 20 0 0 30 60
C A Autarky point B
90 120 150 180 210 240
Price matrix again
• Opportunity cost: The cost what is given up to undertake any activity
Cost/Price per unit in $A Wheat Cloth Australia 1 1.50 China 2 1
Exercise
• P53
• Review microeconomics
– Indifference curves – Margin – MRT & MRS
• Free trade between countries
– No tariff barriers, no transport cost…
• Labor theory of Value employed
– Only labor as the production factor
• Do you have any questions on the assumptions? • No Assumptions, No Models
PTF
Wh
90 120 150 180 210 240
Australia’s PPC
140 120 100 80 60 40 20 0
Cl
PTF
Wh
0 20 40 60 80 100 120 140
China’s PPC
Characters of PPC
• To our present knowledge, the PPC’s are linear • Countries could only produce inside the PTF but they’d like to produce more • Consumers in both counties would only consume what they produced but they’d like to consume more
Assumptions of The Ricardian Model
• It is 2x2x1 model • Constant cost of production assumed in both countries and industries
– To increase one more unit commodity, the constant units of the other commodity should be given up – Resources or factors of production are either perfect substitutes for each other – All units of the same factor are of exactly the same quality
More than two commodities case
Commodity Australia $A price China $C price China $A price for e=2 12
1
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2
6
2 3 4 5
4 6 8 10
4 3 2 1
8 6 4 2
More than two countries case
The Result
• Consume more than what they are able to produce • People could have more real goods and services • World resources could be more efficiently allocated
• Opportunity cost table Explain the process
Australia China Australia China +1Wh +1Wh +1Cl +1Cl -2/3Cl 1-2Cl -1 1/2Wh -1/2Wh
• The country with lower opportunity cost has the comparative advantage in that commodity • In Australia, Pw/Pc=2/3 • In China, Pw/Pc=2/1 • (Pw/Pc)A<(Pw/Pc)c A has comparative advantage in Wheat, while China in Cloth
How to identity the comparative advantage
• • • • Relative opportunity cost Relative Price Ratios The absolute slope of PPCs The PPCmore close to which axis, the country has comparative advantage in which commodity