Part Four Applied Microeconomics:International Trade,Government,and the Environment Chapter 15 Comparative advantage and protectionism Chapter 16 Government taxation and expenditure Chapter 17 Promoting more efficient markets Chapter 18 Protecting the environment Chapter 19 Efficiency vs.equality:the big trade- off 1 2023/7/17 Economics
1 2023/7/17 Economics Part Four Applied Microeconomics:International Trade,Government,and the Environment ◼ Chapter 15 Comparative advantage and protectionism ◼ Chapter 16 Government taxation and expenditure ◼ Chapter 17 Promoting more efficient markets ◼ Chapter 18 Protecting the environment ◼ Chapter 19 Efficiency vs. equality:the big tradeoff
Chapter 15 Comparative advantage and protectionism A.The nature of international trade B.Comparative advantage among nations C.Protectionism 2 2023/7117 Economics
2 2023/7/17 Economics Chapter 15 Comparative advantage and protectionism A.The nature of international trade B.Comparative advantage among nations C.Protectionism
A.The nature of international trade Differences between International and domestic trade:expanded trading opportunities;sovereign nations;exchange rate(which is the relative price of different currencies). The sources of international trade:diversity in endowments of natural resources;differences in tastes or preferences;different in costs of production. 3 2023/7117 Economics
3 2023/7/17 Economics A.The nature of international trade ◼ Differences between International and domestic trade:expanded trading opportunities;sovereign nations;exchange rate(which is the relative price of different currencies). ◼ The sources of international trade:diversity in endowments of natural resources;differences in tastes or preferences;different in costs of production
B.Comparative advantage among nations The principle of comparative advantage holds that a country can benefit from trade even if it is absolutely more efficient (or less efficient)than other countries in the production of every good. so each country will benefit if it specializes in the production and export of those goods that it can produce at relatively low cost,conversely,it imports those goods which it produces at relatively high cost.(P299) 4 2023/7/17 Economics
4 2023/7/17 Economics B.Comparative advantage among nations ◼ The principle of comparative advantage holds that a country can benefit from trade even if it is absolutely more efficient (or less efficient) than other countries in the production of every good. so each country will benefit if it specializes in the production and export of those goods that it can produce at relatively low cost, conversely,it imports those goods which it produces at relatively high cost.(P299)
Table 15-1American and European labor requirements for production Necessary labor for production(labor-hour) product In America In Europe 1 unit of 1 3 food 1 unit of 2 4 clothing 5 2023/7117 Economics
5 2023/7/17 Economics Table 15-1American and European labor requirements for production Necessary labor for production(labor-hour) product In America In Europe 1 unit of food 1 3 1 unit of clothing 2 4
Table 15-2 1American and European opportunity costs for production Opportunity costs product In America In Europe food V2* 34 clothing 2 43* 6 2023/7/17 Economics
6 2023/7/17 Economics Table 15-2 1American and European opportunity costs for production Opportunity costs product In America In Europe food 1∕2* 3∕4 clothing 2 4∕3*
Figure 15-1 Comparative advantage (600 labor hours) Clothing 生产：A(520,40) Terms of trade (贸易条件) E(0,150) is the ratio of 300 export prices to import A(410,110) prices..(1/2-3/4) 150 E(110,80) A(400,100) 100 75 E10075) 0 100 200 400 600 Food 7 2023/7/17 Economics
7 2023/7/17 Economics Figure 15-1 Comparative advantage O Food 300 Clothing 600 150 200 100 400 75 E(100,75) E’(110,80) A(400,100) 100 A’(410,110) 生产：A(520,40) E(0,150) (600 labor hours) Terms of trade （贸易条件） is the ratio of export prices to import prices.(1/2-3/4)
Extensions to many commodities and countries With many commodities,there is a spectrum of comparative advantage The principles developed apply between groups of countries and,indeed,between regions within the same country. ■Triangular and multilateral trade(三角贸易 和多边贸易) 8 2023/7117 Economics
8 2023/7/17 Economics Extensions to many commodities and countries ◼ With many commodities,there is a spectrum of comparative advantage. ◼ The principles developed apply between groups of countries and, indeed,between regions within the same country. ◼ Triangular and multilateral trade(三角贸易 和多边贸易)
Qualifications and conclusions Two important qualifications to te theory of comparative advantage: --Classical assumptions. --Income distribution Conclusion:Notwithstanding its limitation,the theory of comparative advantage is one of the deepest truths in all of economics.Nations that disregard comparative advantage pay a heavy price in terms of their living standards and economic growth. 9 2023/7117 Economics
9 2023/7/17 Economics Qualifications and conclusions ◼ Two important qualifications to te theory of comparative advantage: --Classical assumptions. --Income distribution ◼ Conclusion:Notwithstanding its limitation,the theory of comparative advantage is one of the deepest truths in all of economics.Nations that disregard comparative advantage pay a heavy price in terms of their living standards and economic growth
C.Protectionism(贸易保护主义) 0* Under free trade,indeed in markets generally,goods flow uphill from low-price regions to high-price regions. Trade barriers:Prohibitive tariff,nonprohibitive tariff,quotas,transportation costs. Arguments for and against protectionism: noneconomic goals;ubsound ground for tariff,potentially valid arguments for protection. 10 2023/7117 Economics
10 2023/7/17 Economics C.Protectionism(贸易保护主义) ◼ Under free trade, indeed in markets generally,goods flow uphill from low-price regions to high-price regions. ◼ Trade barriers:Prohibitive tariff, nonprohibitive tariff, quotas,transportation costs. ◼ Arguments for and against protectionism: noneconomic goals; ubsound ground for tariff,potentially valid arguments for protection