03 Interdependence and the Gains from Trade(1)

0
computer 100 200 300
Consumption with and without trade
• Without trade,
– U. S. consumers get ___ computers and ___ tons of wheat. (250, 2500); – Japanese consumers get ___ computers and ___ tons of wheat. (120, 600).
Our Example
• • • • Two countries: the U.S. and Japan Two goods: computers and wheat One resource: labor, measured in hours We will look at how much of both goods each country produces and consumes
computer 100 200
300
0
Exports & Imports
• Exports: goods produced domestically and sold abroad. To export means to sell domestically produced good abroad. • Imports: goods produced abroad and sold domestically. To export means to purchase goods produced in other countries.
U.S. Consumption With Trade
wheat (ton) 5,000
produce + imported
– exported = amount consumed
computer 160 110 0 270
wheat 3400 0 700 2700
4,000 3,000
2,000 1,000 0
• Your graph should measure computers on the horizontal axis.
Japan’s PPF
at (ton) 2,000
1,000
Japan can produce 240 computers per month, or 1,200 tons of wheat, or other combinations of PPF
ACTIVE LEARNING 2
Production under trade
1. Suppose the U.S. produces 3400 tons of wheat. How many computers would the U.S. be able to produce with it remaining labor? Draw the point representing this combination of computers and wheat on the U.S. PPF. 2. Suppose Japan produces 240 computers. How many tons of wheat would Japan be able to produce with its remaining labor? Draw this point on Japan’s PPF.
Principles of Microeconomics
by N. Gregory Mankiw
Chapter 3
Interdependence and the Gains from Trade
In this chapter, look for the answers to these questions:
Independence
Every day you rely on many people from around the world, most of whom you’ve never met, to provide you with the goods and services you enjoy.
– How much of each good is consumed in the U.S.? Plot this combination on the PPF. – How much of each good is consumed in Japan? Plot this combination on the PPF.
Japan
Consumption Consumption Gains from without trade with trade trade computers 120 130 10
wheat
600
700
100
Where Do These Gains Come From
• Absolute advantage: • The U.S. has an absolute advantage in wheat:
– it requires 10 hours of labor to produce 1 ton of wheat in U.S., while 25 in Japan.
• If each country has an absolute advantage in one good and specializes in that good, then both countries can gain from trade.
U.S. Production With Trade
wheat (ton)
5,000
4,000
3,000 2,000 1,000 0
It requires 34,000 hours of labor to produce 3400 tons of wheat in U.S.
The remaining 16,000 hours of labor can produce 160 computers
wheat (son) 5,000 4,000 3,000 2,000 1,000 0
The U. S. PPF
U.S. can produce 500 computers per month, or 5,000 tons of wheat, or other combinations of PPF
computer 100 200 300 400 500
Japan’s Consumption With Trade
wheat (ton) 2,000 computer produced 240 + imported 0 – exported 110 = amount 130 consumed wheat 0 700 0
• We will compare consumption without trade to consumption with trade. • First we need to see how much of each good is produced and traded by the two countries.
700
1,000
0
computer 100 200
300
Trade Makes Both Countries Better Off
U.S.
Consumption Consumption Gains from without trade with trade trade computers wheat 250 2,500 270 2,700 20 200
ACTIVE LEARNING 3
Consumption under trade
• Supposed the U.S. exports 700 tons of wheat to Japan, and imports 110 computers from Japan. (So Japan imports 700 tons wheat and exports 110 computers.)
来自俄亥俄州克 里夫兰的发胶 来自台湾的 移动电话
来自中国的 衬衫
来自肯尼亚 的咖啡
Independence
• One of the Ten Principles from Chapter 1: Trade can make everyone better off. • We now learn why people-and nationschoose to be interdependent, and how they can gain from trade.
computer 100 200 300 400 500
Japan’s Production With Trade
wheat (ton) 2,000
It requires 30,000 hours of labor to produce 240 computers in Japan
1,000
Therefore, the wheat production in Japan is zero
– If the country chooses to be self-sufficient – If it trades with the other country
Production Possibilities in the U.S.
• The U.S. has 50,000 hours of labor available for produce, per month. • Producing one computer requires 100 hours of labor. • Producing one ton of wheat requires 10 hours of labor.