Ricardos classic demonstration of the effects and sources, International Economics

Assignment Help:

Q. It is argued that the United States could be foolish to maintain a free-trade stance in a world in which all other countries exploit prisoner or child labor, or are protectionist. On the other hand, Ricardo's classic demonstration of the effects and sources of comparative advantage cogently demonstrates that regardless of other country policy, free trade remains the first best policy for a country to follow, since it will maximize its consumption possibilities (conditional upon other country policies). Illustrate the contradiction with the argument in the preceding paragraph.

Answer: In the circumstance of the Ricardian model it is true that gains from trade are severely a result of world terms of trade which vary from domestic marginal rates of substitution. In such a world the cause why foreign goods are cheap is of no concern to domestic consumers. Though in worlds which permit for large-scale labour migration ignoring labour condition abroad may eventually result in living standards for domestic workers to be dragged down.

Presume that Airbus (European Union) and Boeing (U.S.) both hope to enter the Hungarian market with the next new generation airliner. They both have identical demand and cost conditions (as indicated in the graph above).

2267_Ricardos classic demonstration of the effects and sources.png


Related Discussions:- Ricardos classic demonstration of the effects and sources

What is securitization, Q. What is securitization? Answer: The ...

Q. What is securitization? Answer: The term refers to monetary instruments in which bank assets are repackaged in readily marketable forms These kinds of "derivatives"

Expectations prepared by the heckscher-ohlin model, Q. Why do you suppose ...

Q. Why do you suppose that South-South trade does not conform in volume, but does conform in pattern with expectations prepared by the Heckscher-Ohlin model? Answer: The patt

International economics, opportunity cost version is an improvement over th...

opportunity cost version is an improvement over the classical theory of international trade?comment

Capability, In the International Medical Center, clients are patients who ...

In the International Medical Center, clients are patients who use the services provided by the hospital, such as the health program, preventive services, and surgery. Other custom

International trade, why is international trade important for south africa

why is international trade important for south africa

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd