ch02foundations of modern trade theory(国际经济学浙江林学院,岑丽娟)

1、International EconomicsBy Robert J. Carbaugh8th EditionChapter 2:Foundations of Modern Trade TheoryHistorical development of trade theoryMercantilismpositive trade balanceAbsolute advantage (Adam Smith)Countries benefit from exporting what they make cheaper than anyone elseComparative advantage (Dav

2、id Ricardo)Nations can gain from specialization, even if they lack an absolute advantageFoundations of trade theory2Absolute & Comparative AdvantageComparative advantageAbsolute advantage: each nation is more efficient in producing one goodOutput per labor hourNationWineClothUnited States5 bottles20

3、 yardsUnited Kingdom15 bottles10 yardsComparative advantage: the US has an absolute advantage in both goodsOutput per labor hourNationWineClothUnited States40 bottles40 yardsUnited Kingdom20 bottles10 yards3Ricardos Comparative Advantage in money pricesComparative advantageCloth(yards)Wine(bottles)N

4、ationLaborWageQuant. PriceQuant.PriceUS1 hr$20/hr40$0.5040$0.50UK1 hr5/hr100.50200.25UK1 hr$810$0.8020$0.40 (at $1.6 = 1)4Production possibilities scheduleGeneralizes theory to include all factors, not just laborShows combinations of products that can be made if all factors are used efficientlySlope

5、, or marginal rate of transformation, shows the opportunity cost of making more of one good (how much of one good must be given up to make more of another)Comparative advantage5Marginal Rate of TransformationComparative advantage6Production possibilities schedules: constant opportunity costsComparat

6、ive advantage7Supply schedules: constant opportunity costsComparative advantage8Trading under constant opportunity costsComparative advantage9Production gains from specialization: constant opportunity costsComparative advantageAutosWheatAutos WheatAutosWheatUS4040120080-40Canada40800160-4080World801

7、201201604040BeforeAfterNet GainSpecializationSpecialization(Loss)10Consumption gains from trade: constant opportunity costsComparative advantageAutosWheatAutos WheatAutosWheatUS404060602020Canada4080601002020World801201201604040BeforeAfterNet GainTradeTrade(Loss)11Complete specialization under const

8、ant opportunity costsComparative advantage12Changing comparative advantageComparative advantage13Trade restrictions and gains from tradeComparative advantage14Production possibilities schedule under increasing costsIncreasing opportunity costs15Supply schedule under increasing costsIncreasing opport

9、unity costs16Trading under increasing costs: USIncreasing opportunity costs17Trading under increasing costs: CanadaIncreasing opportunity costs18Production gains from specialization: increasing opportunity costsAutosWheatAutos WheatAutosWheatUS51812147-4Canada1761313-47World2224252633BeforeAfterNet GainSpecializationSpecialization(Loss)Increasing opportunity costs19Consumption gains from trade: increasing oppo