Transcript Figure 2-3

Trade in a One-Factor World
Figure 2-3: World Relative Supply and Demand
Relative price
of cheese, PC/PW
a*LC/a*LW
RS 解釋
解釋
6/3=2
1解釋
解釋
2解釋
aLC/aLW
RD 解釋
1/2
RD'
解釋
Q'
L/aLC
L*/a*LW
解釋 均衡
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Relative quantity
of cheese, QC + Q*C
QW + Q*W
Slide 2-1
Trade in a One-Factor World
The relative price after trade
• if neither country produces both goods, we must have
PC
aLC
aLC *
aLw < PW < aLw *
 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
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; 回圖形
Slide 2-5
Trade in a One-Factor World
 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 PC / aLC . 證明用
– The wage rate in Foreign is PW / aLW* .
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Slide 2-6
Trade in a One-Factor World
– 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
PC
aLw *

=
.
PW aLC
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PC / aLC
PW / aLW*
Slide 2-7
Trade in a One-Factor World
• According to relative price after trade:
aLC aLW* PC aLW* aLC* aLW*
–
aLW aLC < PW aLC < aLW* aLC
aLW*
PC / aLC
aLC*
–
aLW < Pw / aLw* < aLC
1 / aLW
–
1/ aLW* <
(3/2)
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PC / aLC
1 / aLC
Pw / aLw* < 1/ aLC*
(3) 
說明
舉例
說明1
說明2
(6)
Slide 2-8
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.
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Slide 2-10