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ECON 4290 Lecture Notes - Lecture 9: Autarky, Comparative Advantage

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limegerbil648
15 Jan 2019
School
York University
Department
Economics
Course
ECON 4290
Professor
Xavier DeVassay

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Document Summary

Notes: slope of ppf is the relative cost of producing clothing (amount of food you have to give up, to get one more unit of clothing) The relative cost of producing clothing in autarky is greater in canada (?) The slope in absolute value of the blue line is the free trade common relative price for clothing. For ricardo, the source of comparative advantage is relative di erence in technology. To get full specialization (which is possible for ricardo) the country most be small in the neoclassical sense. (ex. In ricardo, the worker can go to the food to the clothing industry depending which provides a higher wage. Imagine we could create a world ppf (canada+us) with an unslightened dictator. We assume the ricardian framework (canadian stay in canada, us stay in the us, technological di erence remains). From a, we want to produce more clothing, so we have to produce less food.

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Related Questions

1.True or False: In the Ricardian model, you always produce only the good you have a comparative advantage in producing.

2. True or False: In the Ricardian model, knowing who has a comparative advantage in each good is enough to know the quantity of exports and imports to/from each country.

3. True or false: In the two country two good Ricardian model, it is impossible to have a comparative advantage the production of both goods.

What is a production possibilities frontier? What is the purpose of this model in the real world? How is efficiency shown on the PPF? What would cause a PPF to shift outwards?

9. Which of the following statement(s) about production possibilities frontiers (PPFs) is (are) generally true? 1) the changing slope of the PPF illustrates the concept of increasing costs II) the second derivative of the PPF illustrates the concept of scarcity of resources III) the slope of the PPF illustrates the concept of opportunity costs A) only I B) only II C) only III DI & II E) I & III F) II & III G) I, II & III H) none of the three