国际经济学英文-大卫李嘉图模型

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
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
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
Exercise
• P53
• Review microeconomics
– Indifference curves – Margin – MRT & MRS
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
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
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!
• 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
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
Autarky point (assumption) Wh
60 80 100 120 140
பைடு நூலகம்
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
• 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
More than two commodities case
Commodity Australia $A price China $C price China $A price for e=2 12
1
2
6
2 3 4 5
4 6 8 10
4 3 2 1
8 6 4 2
More than two countries case
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
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
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
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
Price matrix again