7 Meov gener - Cnkin Mode’ Q-o) (actos - Progoxsvone | mede\) — Ricarcdvon Model »: QxAxh « — Specific Factors Medel > 2x2n3 Cony \ adjustabie) = W-O s WAxD CIoSmite adyostmenrs of Factors) Yow Wade is dweo by Gacter aboadance Meade’: 2 Yoovls - clav. © Secd 2 Gockess — Lewes 2 Cagm\ Concave CPF J Lair Ingest Requirements, Ove 7 Cag fe Cie) kk = Tora\ Cog AX-¢ 7 lab iw clom Lt Tera) Lab _ Cag im Feodk _- k«F Feook —> Yee iS toral } 2 Kae vsed bly claw 2 Food. Qe = A ow B decided e Now bom Gacrexs by PeJen axe Vartable ee ®“> You KZ. eve chosen in a. Production C I$0- Qsanr) Oy = Yorgencyy / Least -Cesh wa: ~— §or @=2 3) Cer OA VARS Meo Ge Qe. 672 Are srope -- = ty 2A Cer) tre tangeney foto’ wosrel move 30 F 3 we empley jess L » more K > Re bw Relarve wage 2 Redrarvec of LY, in Feed [ever ‘” Relarrve Demand in G@ s& | toteneve F is) K miensve Line vs vlatwe amovny Z aes absoivte amourt, bok iwdvoteres: (6 ¥)7 hike ve fe (Belarve Pree of Cloth) aes & | [ec . sme] = as BA, B® OS Cc is. L intenswe is te 8 wt, et pes Y =7 Rear” le Ootper Price ZB - Amoonr e$ Laloowy . Reresive) Stoleex~ as Theorem is Pe aa Fo Aon Oy fg , 2A LW ia both Sectors . er : Hist oF Lacome :- Ly compared to Ky ® We Kr MPre \ Rea wv, w eles WW. Me 4 aWhen oe vee. jens L 2 more HK, HOLT As wen D and it TS Equo' to Real w wage Ce. a LS better 0% ave to LER in wetn r Seckoxs + Sieriiae yy 5 X 2 Mee LAS RET, we guesritere away : ee Grom to KS mere RY MERY iD loath Sectors. IF ORY, WY Real wage AeeKnes . Owners 3 Pe Cogirtal are Worse oY D> Whar Wapeens GS ho k Changecl im amcontT f. Labesst fe _y eo sy wher HOLM EPS Pe us 7 Increaseck what eill haggen Fe aer Lesrvezynski Theerer] as c iS L invensive, Ae wit SG more compared) to BMnify in Ge A\thesgh the vra\ L iMcredses @e UV awd Ge, Not only ao Merve vesoocces go lake CG prod , ik tanes away Some Gorm F erccl. 2K The economy wit tend +e be Yelatively etctent ox Predeeing fre goods that, ave intensive im the factors Mok the ceuntry is velatively well endowed.y te eect of = TLnrervatenat Vrade . Same teen im vovk mae tm PRP oe waned ox AsBerent Pactor Abordeance Rome = Wghee yatso +. Phen forergn RK is L abundant, F is R abundant a Oe ae AL, in PRE > Trade Relative Corpsy Price is equalised ece te iale Lacxease in Demacch iw low prsceck goods jac tre peices Carvitvage) Tre im Sseeiy veds. Prvees fe Pe AK any oe yi Pro dvce Move C- eo A im Wd Wun MO af Syne ote oa eo ae VW -> Eyer C F-? Engoris FCoonxyies axe geing, Yo @xeect these goods in wich they Ore velatwely wel endowed | -? Movs Trade wilt a@eck Hist oS LTrcome ake net Ye =) A Pore Power Labesx W Paces Pawex cae Fev & 2 Pocomy Prev Cap W Pon Soey laboor Pe Dueses of Eeoromy's: aBendent factor gain Z Seaxce Sacro \ese . Dheckschec onlin Node\] cy & equalize in bey coontees, Bo also = : 7 . on Cqoalzes - 7 Factor Prvee Squalrzatyvon ' No empivical evrdence | — Move Prodects in realty. — Coenserves Wave AK tech - & may cet Converge fo Po Pe Transgox em COS - Tari ts. [Leon hey Pacador ) ;Standarel Trade Mede\ = Grenevel versser of alt models se Sar Semilay charac feristves — Pee Cimear & concave) = RS Grom ORF World Equittertum Rand * #0) _9 Tracke. . ® we add LrdiYerence Corves = Yow fo. determine cons. eit. Ly Key velatvonships ex STM: — erF -2@ RS ~ RP @ WO - RD € BS- Terms 0$ Trade +) Terms of Trade + Name fa &P Tet = Pegens) = fe We Re . SS Pe: . iy. F a7 Rengesss Femperts) ue Bacon Gnacus | tel’ (5 Being 1 Se sn ters= of yre over Loe will See” ew’ wergare a} an economy SB taBecred vy WS ToT.6 ES a*- §(%& PF Nz RiGee t %eO@e a> 74 h Pe As Pe Changes , iF Pe . Oc * changes a TRe wy TB | RB. Pe Ge * be Fe we nave Imked Per QRS. we ger cerns Pred) Point but aotring ae Qeevt cprtmal cons. ae : We Krew thar V(Cons) = V(Rred) allous vs te consume ar any pgemr on the \So7 VAISS Vwne. Be - wrvodlvce LAW, Sunerton 2 Te. H) LC: SavisGactron/ Ori, by Cons. of goats. Orley Bonctrens 0 : VO%MY8) = LY Ciever sex) Seme common fonctvons = vo Cx) > Ley Os) = 3c. 3° — ) Mararnal Orit : ate _ arainea. ee ace) ATE | monstenie Koss ferr Cea) 4 7 mal ence bY) 6 an ovd cenceey ( Pases:cry ) TLadiQerence Curves ¢ Meno to nici hy. Conveaity Touger » vg head rmw) PreS. of Consumers WW the economy Q-? Production gernt Consumption Ge iIT Value C Rod) = Value Ceons) a re Pe@c rPrGe = Der Pe De Pac - Pde = Pede-P- Be ¢ > a S 5 £ €.- Ge Lane ther Gn ecomomy Exports ov Import depends on Predvetion point relatrve +o Consemprien Pont: 3) Lonax happens when RP (S) change “ @ a + Slope 0 IN- line ' Fr Gs cmanges due to Trade e = KR Da > Dy 2dv(22)7 VO) D, D2> Res Tee se & (Reveans we Lseela conssme Se (dee te ae Wane Incemey wok 1e*s oh clots Cave fo nighes eres) > ye ncesienn +2\ Weare |mel\vcarvons * ToT & ATcT afecr wel ’ beg, ~ Pe ies of 1% ib experts clots PE —~ Lowe oR i OF eaports Feel . (\owex e\ (Ev) inward Lv linei fe berrer .ofK iF “ erpor 5S Foo cd PE —~ wee of§ th i+ exports eclorh > Dee te BLE compare pPivored Peto oS Iv Ine Pe ox Woner re. Tr Gould Se a eves e This gives vs a Imk ble TeT ancl welfare Creneva\ conclusion * : = A Po = M bes x S 2 ™M weit-being 3 VU ee DU wel berng +) Whos nagpens hen 2. econamres Trade Rome ToT + Pe | Foreign TeT> fe Lead oe o export -7.F : or Grater Bl Vow Crowrmr oeers Per Crows iS genevalry biased * ac Food -Biaseck Arcwth Cle PA-Biags eck Growen Be = GewrFer Cond erod) |+) New Point oo} Tangescy keeping fs Censrant C Secne S\oge of TS) r Food -Biosecd KA | Ge, ae Cleth- Biased ~ Le , acm ,QeVv » Lohat HKS MEARS Fos any Po Pe in yerms of AS corve Clots - Biased growth 4 Be. sns8ig QS vrgnrusardS where eS food- Biased growth = PShiZrs RS Jegroarcds | Tagoer on wse\ “being Clotn- Biased Caro Et. he, Bad Ser Wome 2 ee Greed for Foreign - Clom -Biased grow Be angenere WY Se and ar fe Clowh exporting Eeenem y (Aa) worse 0% Crest Bow Forexge Makes TY RS dve 3 Food - -Biaseck , Crcowrh , Pa Pe Crced for ema, Bad Por Feregn-Lmnisen2iny Cavowtn 2 ee Cacopste Phatr Teduces wei Gare and makes oo economy uoorse - 8 Tr worth hove been berret ig me covary had ner grown ay alt. Lmporr Taxiyg , Expor® Ssopsidy 2 Tov “> sit impack Tatesnal ersee (Qomesive) 2 eaperrol errce (word) FF imports eapensse 2 inc The Pe oS Seregn goods in home. ES: jncentwe. to Prodece . inc the e wearer] ff As Dai Faverse Relaren (cons oF ome) Py > ro As Om, DYY Biree¥ Ber” (eco8 ax Foxely’ K LH stars ar Avtarky erice Mus ES siacts ar Avrtarky Price in Forecgn. Cae* \w absence of Trade more exgensive ar ¥ \ess Cxgensive Fereign, Werd May key i He © exeerts to Mv, P converde *K Changes in Equilibriom i} Yome Inposes Tas. > Picces oKe mot geting to Cqua\i2e 2 Bevves a wedge bereen boyers 2 Sellers = E®ecr of Tax 6 Tax 7 & Bogess Toevderce eS Tox S Same Tr AB. He Verrrenl Sisy 15 pre wedge Pa Pag ancd re Tax O In ov eg. it fo the Arst ble TH 2 ES curve¥ -OM&men Ivode Ress Reasons fer Low cosh Technology , Resserces Cavadootes) YWrsjorreol accidents Cineidents) (Historie Conrimgenes) L Lavtra\ advantage Bos locked In due to -eeonemies of} ScaleOver He co. 6 A 2 ow Dynamic Inc Rersres. InGoor \adustyy Acguement ~> Yeme may have Le2 ley ' 2) Le2 box “a high Enry cost CO -> DiGBicuy jo Comperse in Pcesence of Trade with Gems YWavivg C= ey > Avtorisy + Frems have to Produce Sox Domestee mace and over persed of tome ib {5 in a. bexkex PoSittsn .Downward Ste ping, Demand Core @= A-BP > Mexgina) Revenve = Are. Inverse Demanch Sa: = = BG = R-I1e) 8 6 6 Te -(RA_ {8 @) © Reverse of & Gem changes aS its qvonrily seled B- arde . New tTh= Te! (s = 4, @rae) \(@rde) Changes 7 |s > (% oe B@ B 8 Lede) + Eide) ~A@2d9) - £@s*) = A == 5m iS ee Rk s - Le\da — 1 ada - ‘der % 8 oe : - Lada - 1 de : TR + 0: de aa a ATR = TR-TR’ for a small Aa >> de® Se ec are = (F- gal 20 ATR e - _o& SS =e ed 2 i at ao> PMR Be tt Go poke: , hh of lower because Price | eect iS greater | Gieeates tre @ , highec Pot im Sales as Price Weseases 2 NQ i @lesex jo P Alternate method: > A-Be e fe Peay = 6) @e ee6 J TRe PA > Ba- a @ e Me: aT _ A_ ae. 1Ca-20) am 6 6 8 Exeressing MR =f) 1 MR = BRA _ 26 (m= 8era) ® & = BPFE-24 _—_———=4 S = Cteee = - ols °Tota\ Cost = FO + VC Cc = F + dy” He-G Ac > Eye a Ps QT, ACY > Internal Econemies of Seale *K Monsgeliste Compe ston Demand Gueetvon @= sf a ~ be e-P) a- Cs, 9, a) MO OW Whes cvexyone Blhaxges THe SAME Price A= S (equal snore Bex exevyon®) n Equilibtiuom (qn) & Ce) Le-6 LSgmmernie od! Srems)} wis a ey mn 2dao tne C+) Ce cue = Rev” , Pe cove = Red” Whe ae Pi maDVa-> aad c ans ner Eyes c+ SE la S] ee = (9) : tsi \rive oc pes § 8 s Pe Tntense compedtvon in oo n a-(s 4 Sve SbP 0 Bs You many §rres and q — ve weak Prtee wil) be eh oxgeck 2 f- onls, yoxiableSolving Son © Sbe-(S i seo) -G cer ic svP\- 2 sv Ln * : se + TR=O0Q@zicg = _ 2 | Sb (gvsve a ae Hc MRe ATR - (3 A | ste - 2 | @ soln ae e(u é|- 2 — * = (A aa We krow @: S —_. | | n on | ; we oz ji ,e)- at ft. *F] a | oe ®t -. P- 1 BY Sauilibviom : MR=KC P-L se ey PO eh ba on TE ot @-O\U : @-e) is the mark -LE that a Monepelsria GiH enjoys => C2: 140° 5 Pe Foy t Negave PP corve. . id o Ta Pre berg Rov = P= AC {te devive equilibrium al Eye te pape ae | ba = 0 bE Ss As S$, at bot Nok in Awe Save oo Ne we Propey Fon \Trade wm Monogolistic Comperssvon = E®ects of an increase i4 marker Size Trade leads 36 a wider vortety oF goods hovaex markey -2 Dese Se\vers -7 \essex Priee Because ACS A/E)re > SA uv Ss (E) Rew PU Coonstant 9) pares Moser (S) lower (ec) PE iS Wdegeodent ey _ We Gems ‘May |enter HWE fhavkex =P AM. Cave Noted, aod \swex peice As Se, Sei = Gen \exr\ 0% «, Rew . Hence Sew farms may entes —> Om -> “ey Cts - lavgex marker | Ce, - Smalvlee markes KK Imeack 0? Pexfermance oF We TO Comge ds tron. : | Worse fexGorming, Beryrer ger Gorm sy exit : expand Fem’ has a Wighes mark=yP fo 2 Rave Cue = ray as Wa > Caz -¢2%2 =(Pa-c2) 02 “eye ed’\ Qy7a2 HOR 2 (Ri-e0) 7@a- ea) ign) Mars- CPre fO re) I. Trade leads to changes tn. ‘ ‘ CostS AnA hence changes in 4 \ ero$vrs. co & A \neveased marker Sie 2 werSare Winners £ losers =? Low cost Sivrms witl Prive and high cost Giems will exe - Prodverivety ”~ ple Tncveasec) competition -> 1 1% °. = e- Sve be Tarexcept > P+ jo 375 Se von [save Ge< P eee aise se Tatexvceps Salis , Sloge constaxt Bor ®n = AS and His a Ckanges He sloee - [flaess Ye Dew 6c) ¥¢ Tepack, on opexating exohits - Trexe ts Aecrease im demand Sev smal gems) due ye comperyrtory as oes cam charge & ‘lower 0. an Fiems with Me 7 EN! oil exit he Csman Brems! i Wigh costs)Xe Devising the Cprimal Valve 6s OO 19 A Domexic eramele . Fz }$5°,000,ce60 be Bo, ceo Me = Sooo Sy = Yeo ooo Sez \Goocco #* Trade Costs 2 Export Decisions Ly cesrs asseasarxedh with trade (wreve me consomers ave loca tech) ec Ce - Se Be MegeT Hey, Be) Mey rT 3 a Domestic, Exper Ove oO VT, Gy. Om. TE Weg > e™ obser T, it BIW Boe be eesScrable. to exgest ox Iwade in wwe Govetgn market