Countries engage in international trade for two basic reasons Countries trade because they differ either in their resources or in technology Countries trade in order to achieve scale economies or increasing returns in production
Chapter Organization Introduction A Model of a Two-Factor Economy Effects of International Trade Between Two-Factor Economies Empirical Evidence on the Heckscher-- Model Summary Appendix: Factor Prices, Goods Prices, and Input Choices
Introduction The Specific Factors Model International Trade in the Specific Factors Model Income Distribution and the Gains from Trade The Political Economy of Trade: A Preliminary View Summary Appendix: Further Details on Specific Factors
Chapter organization Introduction The Concept of Comparative Advantage A One-Factor Economy Trade in a One-Factor World Comparative Advantage with Many Goods Adding Transport Costs and Nontraded Goods Summary
Structure Utility function(效用函数) Definition Monotonic transformation(单调转换) Examples of utility functions and their indifference curves Marginal utility(边际效用) Marginal rate of substitution边际替代率 MRS after monotonic transformation
Revealed Preference Analysis Suppose we observe the demands (consumption choices) that a consumer makes for different budgets. This reveals information about the consumer's preferences. We can use this information to
