普格尔_国际经济学课件chapter4 trade-factor-availability-and-factor-proportions-are-key.pptVIP

Production and Consumption with Trade For US, price decrease from 2W/C to 1W/C Cloth production decrease from S0 to S1 and cloth consumption increase from S0 to C1 For the rest of the world… Production and Consumption with Trade If world price is smaller than 1W/C (price line flatter), For US, S1 move to the left side, and C1 to the right, US wants to consume more cloth Thus the demand increases in the world market Production and Consumption with Trade There will be deficit in the market, price will increase For the rest of the world, S1 moves to the left side (closer to S0), and production decreases, the export decreases Thus the supply decreases in the world market Production and Consumption with Trade Please try to draw the demand and supply curve for US Market (for the product of cloth) The Gains from Trade Trade allows each country to consume at points that lies beyond its own ability to produce (above PPC) Trade allows each country to achieve a higher community indifference curve But, trade actually hurts some groups while bringing gains to others The Gains from Trade For each country, the gains from trade depend on the country’s international terms of trade Terms of trade: the price the country receives from foreign buyers for its export products, relative to the price that the country pays foreign sellers for its import products It’s the international price ratio, or the relative price of the exporting product The Gains from Trade How to understand terms of trade? The terms of trade for the rest of the world is the relative price of cloth If relative price of cloth is higher, price line would be steeper, the rest of the world will reach a community indifference curve higher than I2 Trade Affects Production and Consumption Within each country, production of export product increases, and production of import product decreases. The country do not necessarily specialize completely in producing export product The productivity increases in the world. In