1.1 Mercantilism 1.2 Trade Based on Absolute Advantage: Adam Smith 1.3 Trade Based on Comparative Advantage: David
Ricardo 1.4 Comparative Advantage and Opportunity Costs 1.5 Comparative Advantage with More Than Two
If a country could achieve a favorable trade balance, it would receive payments from the rest of the world in the form of gold and silver. Such revenues would contribute to an increase in spending and thus a rise in domestic output and employment.
Critics Possible only for short term Assuming static world economy
Chapter 1 Classical Theories of International Trade
1.1 Mercantilism 1.2 Trade Based on Absolute Advantage: Adam Smith 1.3 Trade Based on Comparative Advantage: David
International Economics
Chapter 1
Classical Theories of International Trade
整体概况
概况一
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概况二
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Hale Waihona Puke 概况三点击此处输入 相关文本内容
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Chapter 1 Classical Theories of International Trade
Cost differences govern the international movement of goods. The concept of cost is founded upon the labor theory of value.
1.2 Trade Based on Absolute Advantage: Adam Smith
1.2 Trade Based on Absolute Advantage: Adam Smith
An arithmetic example
A Case of Absolute Advantage
Country
Output per Labor Hour
iPad
Cloth
U.K.
5 sets
20 yards
U.S.
15 sets
10 yards
The U.S. has an absolute advantage in iPad production; its iPad workers' productivity (output per worker hour) is higher than that of the U.K, which leads to lower costs (less labor required to produce a set of iPad).
Ricardo 1.4 Comparative Advantage and Opportunity Costs 1.5 Comparative Advantage with More Than Two
Commodities and Countries 1.6 Theory of Reciprocal Demand 1.7 Offer Curves and the Terms of Trade
In like manner, the U.K has an absolute advantage in cloth production.
Chapter 1 Classical Theories of International Trade
1.1 Mercantilism 1.2 Trade Based on Absolute Advantage: Adam Smith 1.3 Trade Based on Comparative Advantage: David
Two assumptions, within each country:
Labor is the only factor of production and is homogeneous (i.e. of one quality).
The cost or price of a good depends exclusively upon the amount of labor required to produce it.
1.2 Trade Based on Absolute Advantage: Adam Smith
With free trade, countries could concentrate their production on the goods they could produce most cheaply and enjoy all the consequent benefits from the labor division.
Commodities and Countries 1.6 Theory of Reciprocal Demand 1.7 Offer Curves and the Terms of Trade
1.1 Mercantilism
The mercantilists advocated government regulation of trade to promote a favorable trade balance.