MGEC82H3 Lecture Notes - Lecture 2: Autarky, Absolute Advantage, Indifference Curve

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13 Sep 2022

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Mgec82 (frazer) - questions at the end of lecture 2: true, false, or uncertain. If one country is more productive at producing everything than another country, then it has nothing to gain from trading with other countries. To fix ideas, discuss in the context of a world with two countries, and two goods (say cheese and wine): true, false, or uncertain. Suppose that in a ricardian model trading equilibrium, canada is completely specialized in producing and exporting wheat to the u. s. , while the u. s. is completely specialized in producing and exporting autos to canada. Suppose that canada becomes three times as productive in producing autos as it was before.

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