ch03International Equilibrium(国际经济学-(By Robert J. Carbaugh).ppt

Carbaugh, Chap. 3 International EconomicsBy Robert J. Carbaugh9th Edition Chapter 3: International Equilibrium Indifference curves Final pattern of trade depends not just on supply, but also on demand - which is determined by income individual tastes Tastes can be shown graphically with indifference curves, which show the various combinations of two goods that give a consumer the same total level of satisfaction A consumer’s indifference map Indifference curves cont’d Indifference curves have a negative slope Keeping satisfaction constant means giving up some of one good for more of another Indifference curves are convex As the consumer gets more of one good, she is less willing to give up what is left of the other The rate of substituting one good for another is shown by the slope of the curve, the marginal rate of substitution Indifference curves cont’d “Higher” indifference curves those farther from the origin represent greater levels of satisfaction Individual preferences cannot really be added up into a “community indifference curve” but it is useful to imagine that they can for the purposes of trade theory Indifference curves and int’l. trade Basis for trade, gains from trade Equilibrium terms-of-trade limits Theory of Reciprocal Demand Mill Actual trading prices depend on the interaction of trading partners’ demands Final terms of trade will be closer to the domestic price ratio of the nation with stronger demand for the imported good Applies to nations of equal economic size, which will share gains nearly equally Small nations trading with large ones can receive the bulk of the gains from trade Offer curves: supply and demand Offer curves: supply and demand Equilibrium terms of trade Changing equilibrium terms of trade Immiserizing growth * Copyright ?2004, South-Western College Publishing Bringing demand into the model Bringing demand into the model Bringing demand into the model Bringing demand into the model Bringing demand into the model Brin