CHAPTER 2 LABOR PRODUCTIVITY COMPARATIVE ADVANTAGE(比较优势) THE RICARDIAN MODEL(李嘉图模型) 1 anization Introduction The Concept parative Advantage A One-Factor Economy Trade in a One-Factor parative Advantage with Many Goods Adding Transport Costs and Nontraded Goods Summary 2 Countries engage in international trade for two basic reasons: They are different from each other in terms of climate, land, capital, labor, and technology. They try to achieve scale economies in production. The Ricardian model is based on technological differences across countries. These technological differences are reflected in differences in the productivity of labor. Introduction 3 On Valentine’s Day the . demand for roses is about 10 million roses. Growing roses in the . in the winter is difficult. Heated greenhouses should be used. The costs for energy, capital, and labor are substantial. Resources for the production of roses could be used to produce other goods, puters. The Concept of Comparative Advantage 4 Opportunity Cost The opportunity cost of roses in terms puters is the number puters that could be produced with the same resources as a given number of roses. Comparative Advantage A country has parative advantage in producing a goods if the opportunity cost of producing that goods in terms of other goods is lower in that country than it is in other countries. The Concept of Comparative Advantage 5 Suppose that in the . 10 million roses can be produced with the same resources as 100,puters. Suppose also that in South America 10 million roses can be produced with the same resources as 30,puters. This example assumes that South American workers are less productive than . workers. The Concept of Comparative Advantage 6 If each country specializes in the production of the goods with lower opportunity costs, trade can be beneficial for both countries. Roses have lower opportunity costs in South America. Computers have lower opportunity costs in the .
