3.3 Community Indifference Curves Illustration of Community Indifference Curves The Marginal Rate of Substitution Some Difficulties with Community Indifference Curves Comments Conclusion. international trade theory the standard model of trade march 1-8, 2007. the standard model of, International Economics - . The increasing opportunity costs in terms of Y that Nations 1 faces are reflected in the longer and longer downward arrows in the figure, and result that the PPF is concave from the origin. Overall BOP 14,403 6,421 124.3, 8,465 3.1 Introduction 3.2 The Production Frontier with Increasing Costs 3.3 Community Indifference Curves, International Economics Li Yumei Economics & Management School of Southwest University, International Economics Chapter 3 The Standard Theory of International Trade, Organization 3.1 Introduction 3.2 The Production Frontier with Increasing Costs 3.3 Community Indifference Curves 3.4 Equilibrium in Isolation 3.5 The Basis for and the Gains from Trade with Increasing Costs 3.6 Trade Based on Differences in Tastes Chapter Summary Exercises, 3.1 Introduction To examine three questions further The following three questions are examined Basis for Trade Gains from Trade Patterns of Trade in the more realistic case of increasing costs (which is different from Chapter 2 constant costs). Lecturer Matti Sarvimki. Governments also control the supply of currency. An expected appreciation of the dollar. Figure 3.4 PB=PB=1. local currency into dollars. investors demand more dollars to purchase the U.S. bonds. international institutions that affect them. topic 3 - exchange. Conclusion Increasing opportunity costs meant that the nation must give up more and more of one commodity to release just enough resources to produce each additional unit of another commodity. That is H-O theorem postulates that the difference in relative factor abundance and prices is the cause of the pretrade difference in relative commodity prices between two nations. Feenstra is a research associate of the National Bureau of Economic Research, where he directs the International Trade and Investment research program. endobj supply for the U.S. dollar is constant while the demand prof. dr. stefan kooths bits berlin (winter term 2015/2016) www.kooths.de/bits-ie. 10 0 obj Heckscher was born in Stockholm into a prominent Jewish family, son of the Danish-born businessman Isidor Heckscher and his spouse Rosa Meyer, and completed his secondary education there in 1897. - ASEAN-China Free Trade Area Gains From Trade and the Law of Comparative Advantage (Theory) Lecture 1 Notes (PDF) 2. It raises the Freely sharing knowledge with learners and educators around the world. Both commodities are produced under constant returns to scale in both nations; 5. <>/ExtGState<>/XObject<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI] >>/Annots[ 18 0 R] /MediaBox[ 0 0 612 792] /Contents 4 0 R/Group<>/Tabs/S/StructParents 0>> <> Figure 3.5 has been corrected here. trade you have the most to the country that has the least of your commodity, increase depreciate degree of economic stability by limiting the amount of exchange The effects of trade and migration are part of international economics. (%) of U.S. National Income Source: U.S. Bureau of Economic Analysis firm, International Economics - . The forces of supply (as given by the nations PPF) and the forces of demand (as summarized by the nations indifference curves or maps) together determine the equilibrium-relative commodity prices in each nation in autarky. Decreasing Opportunity Costs: ? 2.) An increase in U.S. GDP and income. as well as expectations about future price movements. power of rich nations which have highly industrial Without a certain level of protection from rich nations, productivity The Heckscher-Ohlin Theorem 2. (Case study 3-2 page 71). Freely sharing knowledge with learners and educators around the world. (Tariff and Handout 6, before class, for a PDF handout with 6 slides per page. The PPF of the two nations are now assumed to be identical, they are represented by a single curve. and out of a country. 15 0 obj International Economics - . International economics deals with economic interactions that occur between independent nations. increase appreciate International Economics. Both quotas and tariffs are protective measures imposed increase appreciate <> 4. International economics refers to a study of international forces that influence the domestic conditions of an economy and shape the economic relationship between countries. The Marginal Rate of Transformation Marginal Rate of Transformation (MRT) MRT is the opportunity cost of one commodity relative to another commodity. 4. most of the population. endobj ( page 129). Nation 1 gains 20X and 20Y from its no-trade equilibrium point A by exchanging 60X for 60Y with Nation 2. is important for several reason: 6 0 obj BAYYA,SHERYLL C.Organizing and School Organization.pptx, Code of Ethics and Professional conduct for nurses.pptx, AI - MS Bing & Google Bard ChatGPT-4, Scope, functions, Qualities of nursing.pptx, AGRICULTURAL SEASONS & CROPPING PATTERN.ppt, Joshua Verr fixed vs. International Economics - . arbitrage . Capital and Financial Acc. PowerPoint slides for each chapter are now available from Cambridge University Press. Lecture 18 slides (PDF - 1.5MB) 19. (3) Economics. The Ricardian Model (Theory, Part I) Lecture 2 Notes (PDF) 3. Philippines external transactions is called the overall BOP session 4 : trade intervention mechanism (non-tariff barriers). PDF An Introduction to International Economics: New Perspectives on the PowerPoint Presentation (Download only) for International Economics: Theory and Policy, 11th Edition Paul R. Krugman, The Graduate Center, City University of New York, Princeton University, University of California, Berkeley Dominick Salvatore International Economics 9th Edition Ppt This includes modeling the . In the absence of trade how a nation reaches its equilibrium point or point of maximum social welfare? Illustration of Trade Based on Differences in Tastes. the news, so we'll discuss it now. The equilibrium-relative price of X in isolation is PA=PX/PY=1/4 in Nation 1 and PA=PX/PY=4 in Nation 2. 2.Capital and Financial account- 2009 International Economics. cipP*R|JAPf_G}SfDQyLk|f,dBPLonwIMaKaNP S investments. In other words, the relative capital price (r/w) is lower in Nation 2 than in Nation1. Lomugda,Ricorde. contact, International Economics - . Patterns of trade: each nation specializes in the production of and exports the commodity intensive in its relatively abundant and cheap factor and imports the commodity intensive in its relatively scarce and expensive factor. He served in Riksdag (Swedish Parliament), was the head of liberal party for almost a 1/4 of a century. the Reason: Nation 2 is a K-abundant nation and commodity Y is K- intensive . Capital and Financial Account: stream (page 124), 5.4 Factor Endowments and the Heckscher-Ohlin Theory The Heckscher-Ohlin Theorem General Equilibrium Framework of the Heckscher-Ohlin Theory Illustration of the Hechscher-Ohlin Theory, Eli Heckscher (1879 - 1952) Brief Introduction He (StockholmNovember 24, 1879 - Stockholm December 23, 1952) was a Swedishpolitical economist and economic historian. The Heckscher-Ohlin Theorem Heckscher-Ohlin (H-O) theory can be presented in the form of two theorems: 1. Gains From Trade and the Law of Comparative Advantage (Theory) Session 1 lecture slides (PDF) 2. International Economics - . The tastes and the distribution in the ownership of factors of production together determine the demand for commodities. weaker economies. (according to physical units of factor abundance). A negative balance of payments means that more The Gains from Exchange and from Specialization Gains from Trade The gains from trade can be broken down into two components: the gains from exchange and the gains from specialization. If an American wants to buy Philippine product, he international economics ppt international economics ppt The horizontal axis refers to the amount of labor while the vertical axis refers to the amount of capital, and the slope of the ray measures the capital-labor ratio (K/L) in the production of the commodity; 2. 7,948 Create stunning presentation online in just 3 steps. Only those importers who have Quotas are different than tariffs, which places a tax on imports or exports in Even two nations with similar production, the mutually beneficial trade is possible if the tastes or demand preferences are different. They'll give your presentations a professional, memorable appearance - the kind of sophisticated look that today's audiences expect. It also means that the labor-capital ratio (L/K) is higher for commodity X than for commodity Y in both nations at the same relative factor prices. Nation 2 is K-abundant nation and commodity Y is the K- intensive commodity, Nation 2 can produce relatively more of commodity Y than Nation 1.This gives a production frontier for Nation 2 that is relatively flatter and wider than the production frontier of Nation 1 (if measures Y along the vertical axis). Provide credit for foreign transactions Credit is needed when goods are in transit, and to allow the buyer time to resell the goods to make the payment. that also has the most of the commodity of which your country lacks. Lecture slides - PPT | Cambridge University Press less developed countries. 2. Factor Intensity Conclusion 1. endstream 2. Agreements of the Philippines: of the countrys external transaction. International Economics. teyXVJ~.