Slide 2-1Copyright © 2003 Pearson Education, Inc. 解釋 RD' Q'Q' 2 解釋 解釋 RD 解釋 解釋 1 解釋 解釋 a LC /a LW a * LC /a * LW RS 解釋 解釋 Figure 2-3: World Relative Supply and Demand Trade in a One-Factor World Relative price of cheese, P C /P W Relative quantity of cheese, Q C + Q * C Q W + Q * W L/a LC L * /a * LW 解釋 解釋 均衡 均衡 6/3=2 解釋 1/2 解釋

Slide 2-2Copyright © 2003 Pearson Education, Inc. relative demand curve (RD)  The RD curve shows that the demand for cheese relative to wine is a decreasing function of the price of cheese relative to that of wine.  The downward slope of RD reflects substitution effects. 回圖形 回圖形

Slide 2-3Copyright © 2003 Pearson Education, Inc. determining the relative price after trade -- 1  The equilibrium relative price of cheese is determined by the intersection of the relative supply and relative demand curves.  When the relative price of cheese is between the two countries’ pretrade prices, each country will specialize in the production of the good in which it has a comparative advantage. H produces only cheese, F only wine. (point 1) 回圖形 回圖形

Slide 2-4Copyright © 2003 Pearson Education, Inc. determining the relative price after trade -- 2  If the relative price of cheese is equal to its opportunity costin H, the H need not specialize in producing either cheese or wine.  H must be producing both some wine and some cheese.  F does specialize completely in producing wine. (point 2) 回圖形 回圖形

Slide 2-5Copyright © 2003 Pearson Education, Inc. Trade in a One-Factor World  The Pattern of trade It therefore remains true that if acountry does specialize, it will do so in the good in which it has a comparative advantage. 回相對價格 ; 回圖形 回相對價格 回圖形  The relative price after trade if neither country produces both goods, we must have PCPWPCPW a LC a Lw a LC * a Lw * <<

Slide 2-6Copyright © 2003 Pearson Education, Inc.  Why a country’s production pattern is determined by comparative advantage? Relative Wages –Because there are technological differences between the two countries, trade in goods does not make the wages equal across the two countries. –The wage rate in Home is P C / a LC. 證明用 證明用 –The wage rate in Foreign is P W / a LW *. Trade in a One-Factor World

Slide 2-7Copyright © 2003 Pearson Education, Inc. – The relative wage of a country’s workers is the amount they are paid per hour, compared with the amount workers in another country are paid per hour. – The relative wage of Home workers is Trade in a One-Factor World P C / a LC P W / a LW * PCPWPCPW a Lw * a LC = .

Slide 2-8Copyright © 2003 Pearson Education, Inc. According to relative price after trade: – Trade in a One-Factor World a LW * a LC a LW * a LC a LW < PCPWPCPW < a LC * a LW * a LC a LW * a LW < P C / a LC P w / a Lw * < a LC * a LC 1 / a LW 1/ a LW * < P C / a LC P w / a Lw * (3/2)(6) < 1 / a LC 1/ a LC *  說明 1 說明 1  說明 2 說明 2  舉例 舉例 (3)  說明 說明

Slide 2-9Copyright © 2003 Pearson Education, Inc. This can be illustrated with the help of a numerical example: –Assume that P C = $12 and that P W = $12. Therefore, we have P C / P W = 1 as in our previous example. –Since Home specializes in cheese after trade, its wage will be (1/a LC )P C = ( 1/1)$12 = $12. –Since Foreign specializes in wine after trade, its wage will be (1/a * LW ) P W = (1/3)$12 = $4. –Therefore the relative wage of Home will be $12/$4 = 3. 返回 返回 Trade in a One-Factor World

Slide 2-10Copyright © 2003 Pearson Education, Inc. relative wage -- 2 The relative wage lies between the ratios of the two countries’ productivities in the two industries, so each country ends up with a cost advantage in one good. –Because of its lower wage rate, F has a cost advantage in wine, even though it has lower productivity. –The country with the higher absolute advantage will enjoy a higher wage after trade.