Unit 1
... • Why aren’t your parents farmers? • How do we satisfy our wants and needs in a global economy? – We can be economically self-sufficient. – We can specialize and trade with others, leading to economic interdependence. • Leads to increases in allocative and productive efficiency and creates a divisio ...
... • Why aren’t your parents farmers? • How do we satisfy our wants and needs in a global economy? – We can be economically self-sufficient. – We can specialize and trade with others, leading to economic interdependence. • Leads to increases in allocative and productive efficiency and creates a divisio ...
Participants in International Trade
... • Open economy leads to more production of certain goods (exports) and less of others (imports) • Do such resource shifts make economic sense? • Increase productivity of a nations resources and allow for greater output and income • Ricardo: specialize even if some other economy is more productive in ...
... • Open economy leads to more production of certain goods (exports) and less of others (imports) • Do such resource shifts make economic sense? • Increase productivity of a nations resources and allow for greater output and income • Ricardo: specialize even if some other economy is more productive in ...
Answers to Homework #2
... grade. Please remember the section number for the section you are registered for, because ou will need that number when you submit exams and homework. Late homework will not be accepted so make plans ahead of time. Please show your work. Good luck! 1. Absolute Advantage and Comparative Advantage The ...
... grade. Please remember the section number for the section you are registered for, because ou will need that number when you submit exams and homework. Late homework will not be accepted so make plans ahead of time. Please show your work. Good luck! 1. Absolute Advantage and Comparative Advantage The ...
Ch 04
... Exchange Rates Impact Global Trade When an economy’s currency is strong: Domestic companies find it harder to export products Foreign companies find it easier to import products Domestic companies may move production to cheaper production sites in foreign countries ...
... Exchange Rates Impact Global Trade When an economy’s currency is strong: Domestic companies find it harder to export products Foreign companies find it easier to import products Domestic companies may move production to cheaper production sites in foreign countries ...
comparative advantage
... Without trade, consumption is restricted to what is produced. With trade, consumption in each country is expanded because world production is expanded when each country specializes in producing the good in which it has a comparative advantage. ...
... Without trade, consumption is restricted to what is produced. With trade, consumption in each country is expanded because world production is expanded when each country specializes in producing the good in which it has a comparative advantage. ...
Lecture notes 4 September 5 - 8: Specific Factors
... 22.Trade benefits the factor that is specific to the export sector of each country, but hurts the factor that is specific to the import-competing sectors. 23.Trade has ambiguous effects on mobile factors. Trade policy and Unemployment 24.Trade benefits a country by expanding choices. Possible to r ...
... 22.Trade benefits the factor that is specific to the export sector of each country, but hurts the factor that is specific to the import-competing sectors. 23.Trade has ambiguous effects on mobile factors. Trade policy and Unemployment 24.Trade benefits a country by expanding choices. Possible to r ...
Document
... Therefore have nothing to export An absolute disadvantage in a product does not preclude having a comparative advantage in that product Vietnam could have an absolute disadvantage in rice, but still export rice because of its comparative advantage ...
... Therefore have nothing to export An absolute disadvantage in a product does not preclude having a comparative advantage in that product Vietnam could have an absolute disadvantage in rice, but still export rice because of its comparative advantage ...
From Feudalism to Mercantilism –History and Economics
... The assertion of national power and the presumption of right Assumption that the welfare of the community would follow from the pursuit of national strength and power (sound familiar?) The duties of the classes and the harmony of interests o The laborer's lot--workers were to be poor but not impover ...
... The assertion of national power and the presumption of right Assumption that the welfare of the community would follow from the pursuit of national strength and power (sound familiar?) The duties of the classes and the harmony of interests o The laborer's lot--workers were to be poor but not impover ...
The Economic Problem: Scarcity and Choice
... dictate what will be produced (or not produced) by choosing what to purchase (and what not to purchase). • Free enterprise: under a free market system, individual producers must figure out how to plan, organize, and coordinate the production of products and services. • The distribution of output is ...
... dictate what will be produced (or not produced) by choosing what to purchase (and what not to purchase). • Free enterprise: under a free market system, individual producers must figure out how to plan, organize, and coordinate the production of products and services. • The distribution of output is ...
The Circle of James Mill (1773
... 2. Population limited by “moral or physical evil” or by fear of lacking the means of subsistence – Means of subsistence increase faster than population owing to accumulation of capital 3. Productivity may be increased by accumulating capital (= “abstinence”) – Abstinence (on margin) as factor of pro ...
... 2. Population limited by “moral or physical evil” or by fear of lacking the means of subsistence – Means of subsistence increase faster than population owing to accumulation of capital 3. Productivity may be increased by accumulating capital (= “abstinence”) – Abstinence (on margin) as factor of pro ...
Price or Quality Competition? Old World, New World and Rising
... competing with the developing countries’ ones. Because of their products’ superior quality, EU countries, for instance, have less direct competition with developing countries’ products than Japan or ...
... competing with the developing countries’ ones. Because of their products’ superior quality, EU countries, for instance, have less direct competition with developing countries’ products than Japan or ...
International Capital Flows I
... production of a good if it has a lower unit labor requirement than the foreign country in this good. – Assume that aLC < a*LC and aLW < a*LW • This assumption implies that Home has an absolute advantage in the production of both goods. Another way to see this is to notice that Home is more productiv ...
... production of a good if it has a lower unit labor requirement than the foreign country in this good. – Assume that aLC < a*LC and aLW < a*LW • This assumption implies that Home has an absolute advantage in the production of both goods. Another way to see this is to notice that Home is more productiv ...
Click here to Exam as Word File
... a. government controls the factors of production. b. individuals and the government make economic decisions. c. government interference in the economy is minimal. d. government purchases goods and services from consumers. ...
... a. government controls the factors of production. b. individuals and the government make economic decisions. c. government interference in the economy is minimal. d. government purchases goods and services from consumers. ...
Economic Simulation
... Cartograms are maps in which country size is dependent on a particular variable. They are used as an efficient method to communicate information on relative country data In this project a rectangular cartogram scaled to GDP will be used. ...
... Cartograms are maps in which country size is dependent on a particular variable. They are used as an efficient method to communicate information on relative country data In this project a rectangular cartogram scaled to GDP will be used. ...
Answer to Quiz #2
... c. Suppose this economy opens to trade and the world price of this good is $80. Describe what happens in this market when this economy opens to trade. In your answer identify 1) whether this country imports or exports the good; 2) the numeric level of imports or exports; 3) who benefits from this ec ...
... c. Suppose this economy opens to trade and the world price of this good is $80. Describe what happens in this market when this economy opens to trade. In your answer identify 1) whether this country imports or exports the good; 2) the numeric level of imports or exports; 3) who benefits from this ec ...
Economics 2012: Review # 1
... Explain what happens to price when there is excess supply or excess demand. Explain the dynamic process by which supply and demand reach equilibrium. Distinguish between shifts in the curves from movements along the curve. Identify all of the factors that can shift supply and demand, and show the sh ...
... Explain what happens to price when there is excess supply or excess demand. Explain the dynamic process by which supply and demand reach equilibrium. Distinguish between shifts in the curves from movements along the curve. Identify all of the factors that can shift supply and demand, and show the sh ...
Growth and Evolution - Introduction
... economies, sociology and politics – The world economy is experiencing increased integration – The development of global trade now offers many interesting challenges to Canadian businesses – Why then is globalization increasing? ...
... economies, sociology and politics – The world economy is experiencing increased integration – The development of global trade now offers many interesting challenges to Canadian businesses – Why then is globalization increasing? ...
ECN 101 Economics I Student`s Summer Term Name: Final
... and state what happens to the equilibrium price and quantity. c. (8) Suppose instead that the income of both Jennifer and Mark goes up. Show the effect of this increase in incomes on the market for potatoes and state what happens to the equilibrium price and quantity. 3. (13) Show the effect of a de ...
... and state what happens to the equilibrium price and quantity. c. (8) Suppose instead that the income of both Jennifer and Mark goes up. Show the effect of this increase in incomes on the market for potatoes and state what happens to the equilibrium price and quantity. 3. (13) Show the effect of a de ...
Chapter One Comparative Advantage -
... (1) What are the reasons that foreign trade is not the engines for economic growth for most of the developing countries? (2) Put forward some of the suggestions for the developing countries to overcome the difficulties in the foreign trade. 3. What are the reasons to explain the import substitution ...
... (1) What are the reasons that foreign trade is not the engines for economic growth for most of the developing countries? (2) Put forward some of the suggestions for the developing countries to overcome the difficulties in the foreign trade. 3. What are the reasons to explain the import substitution ...
P c - faculty.arts.ubc.ca
... Labor is the only factor of production. The supply of labor is fixed in each country. The productivity of labor in each good is fixed. Labor is not mobile across the two countries. Perfect competition prevails in all markets. All variables with an asterisk refer to the Foreign ...
... Labor is the only factor of production. The supply of labor is fixed in each country. The productivity of labor in each good is fixed. Labor is not mobile across the two countries. Perfect competition prevails in all markets. All variables with an asterisk refer to the Foreign ...
Slide 5-1
... • The economy’s choice of a point on the isovalue line depends on the tastes of its consumers, which can be represented graphically by a series of indifference curves. Copyright © 2003 Pearson Education, Inc. ...
... • The economy’s choice of a point on the isovalue line depends on the tastes of its consumers, which can be represented graphically by a series of indifference curves. Copyright © 2003 Pearson Education, Inc. ...
ECO 2301 Spring 2014 Sec 002 Klaus Becker EXAM 1
... advantage: A. Chris would plant bulbs and Pat would remove trash. B. Pat and Chris would each spend one hour on each task. C. Chris would remove trash and Pat would plant bulbs. D. both Pat and Chris would plant bulbs because they both have an absolute advantage in that task. Chris gives up fewer bu ...
... advantage: A. Chris would plant bulbs and Pat would remove trash. B. Pat and Chris would each spend one hour on each task. C. Chris would remove trash and Pat would plant bulbs. D. both Pat and Chris would plant bulbs because they both have an absolute advantage in that task. Chris gives up fewer bu ...
Comparative advantage
The theory of comparative advantage is an economic theory about the work gains from trade for individuals, firms, or nations that arise from differences in their factor endowments or technological progress. In an economic model, an agent has a comparative advantage over another in producing a particular good if he can produce that good at a lower relative opportunity cost or autarky price, i.e. at a lower relative marginal cost prior to trade. One does not compare the monetary costs of production or even the resource costs (labor needed per unit of output) of production. Instead, one must compare the opportunity costs of producing goods across countries. The closely related law or principle of comparative advantage holds that under free trade, an agent will produce more of and consume less of a good for which he has a comparative advantage.David Ricardo developed the classical theory of comparative advantage in 1817 to explain why countries engage in international trade even when one country's workers are more efficient at producing every single good than workers in other countries. He demonstrated that if two countries capable of producing two commodities engage in the free market, then each country will increase its overall consumption by exporting the good for which it has a comparative advantage while importing the other good, provided that there exist differences in labor productivity between both countries. Widely regarded as one of the most powerful yet counter-intuitive insights in economics, Ricardo's theory implies that comparative advantage rather than absolute advantage is responsible for much of international trade.