Int Econ-Ch03-S2012 International Economics 国际经济学课件教程教案.pptxVIP

CHAPTER T H R E EThe Standard Trade Model An Extension of the Classical Theory of Trade using graphsIncreasing opportunity costsProduction Possibilities Frontier (Curve)-PPC:Straight line (constant opportunity cost) vs Bowed out (increasing opportunity cost) PPC.The straight line PPC shows that each unit of resources used in the production process are perfect substitutes. The same amount would be given up every time, we try to produce one more unit of another product.The opportunity cost of producing one unit of Wheat is 2/3 units of Cloth.Increasing opportunity costsBowed Out PPC:Increasing