International Economics: Theory and Policy (10th Edition) (Pearson Series in Economics)
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A balanced approach to theory and policy applications
International Economics: Theory and Policy provides engaging, balanced coverage of the key concepts and practical applications of the two main topic areas of the discipline. For both international trade and international finance, an intuitive introduction to theory is followed by detailed coverage of policy applications. With this new tenth edition, the author team of Nobel Prize-winning economist Paul Krugman, renowned researcher Maurice Obstfeld, and Marc Melitz of Harvard University continues to set the standard for International Economics courses.
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however, it may be able to sell buttons at the price P1, which is below the cost C0 that an individual Vietnamese ﬁrm would face if it began production on its own. So a pattern of specialization established by historical accident may persist even when new producers could potentially have lower costs. Price, cost (per button) C0 P1 1 2 ACCHINA ACVIETNAM DWORLD Q1 Quantity of buttons produced and demanded CHAPTER 7 External Economies of Scale and the International Location of Production
monetary aspects of international economics. What Is International Economics About? International economics uses the same fundamental methods of analysis as other branches of economics, because the motives and behavior of individuals are the same in international trade as they are in domestic transactions. Gourmet food shops in Florida sell coffee beans from both Mexico and Hawaii; the sequence of events that brought those beans to the shop is not very different, and the imported beans traveled
trade patterns reﬂect relative productivity. The Concept of Comparative Advantage On Valentine’s Day, 1996, which happened to fall less than a week before the crucial February 20 primary in New Hampshire, Republican presidential candidate Patrick Buchanan stopped at a nursery to buy a dozen roses for his wife. He took the occasion to make a speech denouncing the growing imports of ﬂowers into the United States, which he claimed were putting American ﬂower growers out of business. And it is
Finally, the Ricardian model neglects the possible role of economies of scale as a cause of trade, which leaves it unable to explain the large trade ﬂows between apparently similar nations—an issue discussed in Chapters 7 and 8. In spite of these failings, however, the basic prediction of the Ricardian model—that countries should tend to export those goods in which their productivity is relatively high— has been strongly conﬁrmed by a number of studies over the years. Several classic tests of the
the output points 1¿, 2¿, 3¿ corresponding to the labor allocations 1, 2, 3. Because of diminishing returns, PP is a bowed-out curve instead of a straight line. of -1, until the entire labor supply L is employed in the cloth sector. Any particular allocation of labor between the two sectors can then be represented by a point on AA, such as point 2. We can now see how to determine production given any particular allocation of labor between the two sectors. Suppose that the allocation of labor