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International Economics

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cmarquardt94's version from 2016-09-02 18:54

Section

Question Answer
Why does trade occur?differences in technology that countries have & Economies of Scale
What are the two important terms associated with the Ricardian Model?Opportunity Cost and Comparative advantage
When does a country have Comparative Advantage?if their opportunity cost is lower than the other country
What happens when countries speacilize in production in which they have a comparative advantage in?More goods and services can be produced and consumed
How many assumptions are there in the on-factor Ricardian Model?6
What are the assumptions?1. Labor is the only factor of production 2.Labor productivity among countries is different because of technology 3.The supply of Labor in each Country is constant 4. There are 2 goods 5.The competitive market allows workers to be paid a wage equal to the amount of work they put in 6. Two countries: Home and foreign
What is Unit Labor Requirement?It shows HOW many labor hours are required to produce ONE ITEM
What is the Production Possibility frontier?the most max amount of a certain good that can be produced in an ecoomy for a FIXED amount of resources
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