Chapter 4. Specific Factors and Income Distribution
|
|
- Cecily Edwards
- 8 years ago
- Views:
Transcription
1 Chapter 4 Specific Factors and Income Distribution
2 Introduction So far we learned that countries are overall better off under free trade. If trade is so good for the economy, why is there such opposition? ECON40710 University of Notre Dame 4-2
3 Introduction Opening a country to trade has strong effects on the distribution of income within a country: Some industries contract resulting in unemployment Some industries expand resulting in higher wages This happens because in general: Resources cannot move immediately or without cost from one industry to another. Industries differ in the factors of production they demand. ECON40710 University of Notre Dame 4-3
4 Introduction What is the impact of trade on the distribution of income within a country? In the Ricardian model, there is only one factor of production (labor), so we cannot study the effect of trade on income distribution. We need to develop new models that include many factors of production: Specific-factors model (Chapter 4) Heckscher-Ohlin model (Chapter 5) ECON40710 University of Notre Dame 4-4
5 Outline The Specific-Factors Model Earnings of labor Earnings of specific factors (Capital and Land) Summary and conclusions ECON40710 University of Notre Dame 4-5
6 Specific-Factors Model Assumptions of the model 1. Two sectors: Agriculture and Manufacturing. 2. Three factors of production: labor (L), capital (K) and land (T for terrain). 3. Perfect competition prevails in all markets. ECON40710 University of Notre Dame 4-6
7 Specific-Factors Model 1. Supply The economy produces Manufacturing and Agricultural goods Manufacturing uses labor and capital: Q M = F M (L M,K M ) Agriculture uses labor and land: Q A = F A (L A,T A ) Labor is mobile across sectors but capital and land are specific to their industry (immobile) ECON40710 University of Notre Dame 4-7
8 Specific-Factors Model Full employment in factor markets implies that: L K T M A M + L = K = T A = L ECON40710 University of Notre Dame 4-8
9 Specific-Factors Model In each industry, the marginal product of labor declines as the amount of labor used in the industry increases. This happens because there is a fixed amount of the specific factor. ECON40710 University of Notre Dame 4-9
10 Specific-Factors Model The MRT (slope of the PPF) is: MRT = Q Q A M = MPL MPL A M Because of decreasing returns to scale, as the relative quantity of labor used in the manufacturing sector increases: MPL M decreases MPL A increases As a result, the MRT becomes more negative as the relative output of manufactures increases: The PPF is concave to the origin. ECON40710 University of Notre Dame 4-10
11 Specific-Factors Model Production Possibilities Frontier ECON40710 University of Notre Dame 4-11
12 Specific-Factors Model In a competitive economy, profit maximizing firms will hire labor up to the point where the marginal cost of labor equals the marginal revenue. W = P MPL Since labor is mobile across sectors and both goods are produced, the wage rate must be the same in both sectors: W = P MPL = P MPL A A This implies that the (closed economy) relative price is equal to the opportunity cost: P A MPL = M P MPL M A M M ECON40710 University of Notre Dame 4-12
13 Specific-Factors Model 2. Demand Assume that consumer preferences can be represented by wellbehaved indifference curves 3. Equilibrium Consumers maximize their utility: MRS = P M P A Firms maximize profits: All markets clear MRT = P M P A ECON40710 University of Notre Dame 4-13
14 Specific-Factors Model 4. Foreign country Same as Home expect for endowments Assume Home has comparative advantage in manufacturing The autarky relative price of manufactures in Foreign is higher than in Home ( P M */P A * > P M /P A ) When trade is allowed the relative price of manufacturing goes up in Home ECON40710 University of Notre Dame 4-14
15 Specific-Factors Model 5. Autarky and Trade Equilibrium Q A Autarky (point A): production and consumption are equal. C Slope = (P M /P A ) W With trade supply (B) and demand (C) no longer need to be equal. A U 1 U 2 Home exports M and imports A B PPF Q M The rise in utility from U 1 to U 2 is a measure of the gains from trade for the economy. ECON40710 University of Notre Dame 4-15
16 Specific-Factors Model As in the Ricardian model, the country s income is higher so the welfare of the average consumer is higher. However, in the specific factors model that does not imply that every individual is better off. How are earnings of labor, capital, and land affected in importing and exporting industries after trade? Specific factors model notes ECON40710 University of Notre Dame 4-16
17 Summary Following an increase in the relative price of manufactures: Labor can buy more food but less manufactures. So the welfare effect on workers (the mobile factor) is ambiguous. Capital (specific to manufactures, the export good) owners can afford more of both goods, they are better off. Land (specific to agriculture, the import good) owners can afford less of both goods, they are worst off. ECON40710 University of Notre Dame 4-17
18 Trade Politics In the specific-factors, trade benefits a country by expanding choices but not everyone gains from trade. However, those who gain from trade could compensate those who lose and still be better off themselves. Redistribution usually hard to implement. ECON40710 University of Notre Dame 4-18
19 Trade Politics Optimal trade policy must weigh one group s gain against another s loss. Some groups may need special treatment because they are already relatively poor Typically, those who gain from trade are a much less concentrated, informed, and organized group than those who lose. ECON40710 University of Notre Dame 4-19
20 Trade Politics Most economists favor free trade It is easier to use macro policies to reduce employment than to regulated each industries separately Policies introduce distortions It is difficult to evaluate the (full general equilibrium) impact of. ECON40710 University of Notre Dame 4-20
21 Trade Politics Trade shifts jobs from import-competing to export sector. Process not instantaneous some workers will be unemployed as they look for new jobs. Governments usually provide a safety net of income support to cushion the losses to groups hurt by trade (or other changes). How much unemployment can be traced back to trade? No clear pattern ECON40710 University of Notre Dame 4-21
22 Trade Politics ECON40710 University of Notre Dame 4-22
23 Conclusions In the specific-factors model an increase in the relative price of an industry s output will: Have an ambiguous impact on the welfare of the mobile factor Increase the real rental earned by the factor specific to that industry Decrease the real rental of factors specific to other industry ECON40710 University of Notre Dame 4-23
24 Conclusions In the specific-factors model: Trade benefits a country by expanding choices Not everyone gains from trade However, the gains outweigh the losses: Those who gain from trade could compensate those who lose and still be better off themselves That everyone could gain from trade does not mean that they actually do redistribution usually hard to implement ECON40710 University of Notre Dame 4-24
Chapter 4 Specific Factors and Income Distribution
Chapter 4 Specific Factors and Income Distribution Chapter Organization Introduction The Specific Factors Model International Trade in the Specific Factors Model Income Distribution and the Gains from
More informationChapter 4 Specific Factors and Income Distribution
Chapter 4 Specific Factors and Income Distribution Chapter Organization Introduction The Specific Factors Model International Trade in the Specific Factors Model Income Distribution and the Gains from
More informationECO 352 Spring 2010 No. 7 Feb. 23 SECTOR-SPECIFIC CAPITAL (RICARDO-VINER) MODEL
ECO 352 Spring 2010 No. 7 Feb. 23 SECTOR-SPECIFIC CAPITAL (RICARDO-VINER) MODEL ASSUMPTIONS Two goods, two countries. Goods can be traded but not factors across countries. Capital specific to sectors,
More informationInternational Trade Policy ECON 4633 Prof. Javier Reyes. Test #1
International Trade Policy ECON 4633 Prof. Javier Reyes Test #1 Instructions Out of the following 10 questions you must answer only 8. You are free to choose questions from different sections. Section
More informationTrade and Resources: The Heckscher-Ohlin Model. Professor Ralph Ossa 33501 International Commercial Policy
Trade and Resources: The Heckscher-Ohlin Model Professor Ralph Ossa 33501 International Commercial Policy Introduction Remember that countries trade either because they are different from one another or
More informationThe Standard Trade Model
The Standard Trade Model Chapter 5 Intermediate International Trade International Economics, 5 th ed., by Krugman and Obstfeld 1 Standard model of a trading economy the standard trade model is a general
More informationThe Specific-Factors Model: HO Model in the Short Run
The Specific-Factors Model: HO Model in the Short Run Rahul Giri Contact Address: Centro de Investigacion Economica, Instituto Tecnologico Autonomo de Mexico (ITAM). E-mail: rahul.giri@itam.mx In this
More informationHomework #5: Answers. b. How can land rents as well as total wages be shown in such a diagram?
Homework #5: Answers Text questions, hapter 6, problems 1-4. Note that in all of these questions, the convention in the text, whereby production of food uses land and labor, and clothing uses capital and
More informationChapter 3. Labor Productivity and Comparative Advantage: The Ricardian Model
Chapter 3 Labor Productivity and Comparative Advantage: The Ricardian Model Introduction There are potential gains from trade whenever there are differences in autarky prices across countries. We now explore
More informationECO364 - International Trade
ECO364 - International Trade Chapter 2 - Ricardo Christian Dippel University of Toronto Summer 2009 Christian Dippel (University of Toronto) ECO364 - International Trade Summer 2009 1 / 73 : The Ricardian
More informationPPF's of Germany and France
Economics 165 Winter 2 Problem Set #1 Problem 1: Let Germany and France have respective labor forces of 8 and 6. Suppose both countries produce wine and cares according to the following unit labor requirements:
More informationNatural Resources and International Trade
Department of Economics University of Roma Tre Academic year: 2013 2014 Natural Resources and International Trade Instructors: Prof. Silvia Nenci Prof. Luca Salvatici silvia.nenci@uniroma3.it luca.salvatici@uniroma3.it
More informationProfessor H.J. Schuetze Economics 370
Topic 3.1c - Trade Professor H.J. Schuetze Economics 370 Opening Up to Trade Unlike what the simple labour demand model assumes, labour markets do not operate in a global vacuum To be certain, the Canadian
More informationMICROECONOMICS AND POLICY ANALYSIS - U8213 Professor Rajeev H. Dehejia Class Notes - Spring 2001
MICROECONOMICS AND POLICY ANALYSIS - U8213 Professor Rajeev H. Dehejia Class Notes - Spring 2001 General Equilibrium and welfare with production Wednesday, January 24 th and Monday, January 29 th Reading:
More informationAdvanced International Economics Prof. Yamin Ahmad ECON 758
Advanced International Economics Prof. Yamin Ahmad ECON 758 Sample Midterm Exam Name Id # Instructions: There are two parts to this midterm. Part A consists of multiple choice questions. Please mark the
More informationKOÇ UNIVERSITY ECON 321 - INTERNATIONAL TRADE
KOÇ UNIVERSITY ECON 321 - INTERNATIONAL TRADE Mid-term Exam (100 points; 90 minutes) Answer all 5 questions. In providing answers to the questions in this section algebra or graphs might be helpful. State
More informationWho gains and who loses from an import tariff? An export tax? (Assume world prices are fixed).
Who gains and who loses from an import tariff? An export tax? (Assume world prices are fixed). Governments usually impose import tariffs, taxes levied on imports, to promote industries considered to be
More informationEconomics 181: International Trade Homework # 4 Solutions
Economics 181: International Trade Homework # 4 Solutions Ricardo Cavazos and Robert Santillano University of California, Berkeley Due: November 1, 006 1. The nation of Bermuda is small and assumed to
More informationKnowledge Enrichment Seminar for Senior Secondary Economics Curriculum. Macroeconomics Series (3): Extension of trade theory
Knowledge Enrichment Seminar for Senior Secondary Economics Curriculum Macroeconomics Series (3): Extension of trade theory by Dr. Charles Kwong School of Arts and Social Sciences The Open University of
More information13. If Y = AK 0.5 L 0.5 and A, K, and L are all 100, the marginal product of capital is: A) 50. B) 100. C) 200. D) 1,000.
Name: Date: 1. In the long run, the level of national income in an economy is determined by its: A) factors of production and production function. B) real and nominal interest rate. C) government budget
More information1 The Market for Factors of Production Factors of Production are the inputs used to produce goods and services. The markets for these factors of production are similar to the markets for goods and services
More informationHow To Find Out How To Balance The Two-Country Economy
A Two-Period Model of the Current Account Obstfeld and Rogo, Chapter 1 1 Small Open Endowment Economy 1.1 Consumption Optimization problem maximize U i 1 = u c i 1 + u c i 2 < 1 subject to the budget constraint
More informationBailouts and Financial Innovation: Market Completion Versus Rent Extraction
Bailouts and Financial Innovation: Market Completion Versus Rent Extraction Anton Korinek University of Maryland Presentation at the Cowles GE Conference New Haven, CT April 2012 Anton Korinek (UMD) Bailouts
More informationThe Economic Problem: Scarcity and Choice. What is Production?
The Economic Problem: Scarcity and Choice #1 What is Production? Production is the process by which resources are transformed into useful forms. Resources, or inputs, refer to anything provided by nature
More informationThe Circular Flow of Income and Expenditure
The Circular Flow of Income and Expenditure Imports HOUSEHOLDS Savings Taxation Govt Exp OTHER ECONOMIES GOVERNMENT FINANCIAL INSTITUTIONS Factor Incomes Taxation Govt Exp Consumer Exp Exports FIRMS Capital
More informationChapter 13. Aggregate Demand and Aggregate Supply Analysis
Chapter 13. Aggregate Demand and Aggregate Supply Analysis Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics In the short run, real GDP and
More informationExercises Lecture 8: Trade policies
Exercises Lecture 8: Trade policies Exercise 1, from KOM 1. Home s demand and supply curves for wheat are: D = 100 0 S = 0 + 0 Derive and graph Home s import demand schedule. What would the price of wheat
More informationLectures, 2 ECONOMIES OF SCALE
Lectures, 2 ECONOMIES OF SCALE I. Alternatives to Comparative Advantage Economies of Scale The fact that the largest share of world trade consists of the exchange of similar (manufactured) goods between
More informationLabor Demand The Labor Market
Labor Demand The Labor Market 1. Labor demand 2. Labor supply Assumptions Hold capital stock fixed (for now) Workers are all alike. We are going to ignore differences in worker s aptitudes, skills, ambition
More information(First 6 problems from Caves, Frankel and Jones, 1990)
Professor Robert Staiger Economics 39F Problem Set 1 (First 6 problems from Caves, Frankel and Jones, 1990) 1. With reference to the home country s trade triangle illustrated in Figure 2.3, suppose that
More informationAP Microeconomics Chapter 12 Outline
I. Learning Objectives In this chapter students will learn: A. The significance of resource pricing. B. How the marginal revenue productivity of a resource relates to a firm s demand for that resource.
More informationEC2105, Professor Laury EXAM 2, FORM A (3/13/02)
EC2105, Professor Laury EXAM 2, FORM A (3/13/02) Print Your Name: ID Number: Multiple Choice (32 questions, 2.5 points each; 80 points total). Clearly indicate (by circling) the ONE BEST response to each
More informationAGGREGATE DEMAND AND AGGREGATE SUPPLY The Influence of Monetary and Fiscal Policy on Aggregate Demand
AGGREGATE DEMAND AND AGGREGATE SUPPLY The Influence of Monetary and Fiscal Policy on Aggregate Demand Suppose that the economy is undergoing a recession because of a fall in aggregate demand. a. Using
More informationWTO E-Learning. WTO E-Learning Copyright August 2012. The WTO and Trade Economics: Theory and Policy
WTO E-Learning WTO E-Learning Copyright August 2012 The WTO and Trade Economics: Theory and Policy 1 Introduction This is a multimedia course on The WTO and Trade Economics: Theory and Policy. The course
More informationUNIVERSITY OF COLORADO BOULDER, COLORADO. Course Outline and Reading List
UNIVERSITY OF COLORADO BOULDER, COLORADO Economics 4413 International Trade James R. Markusen January 14, 2007 Phone: 492-0748 Office: 216, e-mail: james.markusen@colorado.edu Office Hours: Monday, Wednesday,
More informationChapter 12. Aggregate Expenditure and Output in the Short Run
Chapter 12. Aggregate Expenditure and Output in the Short Run Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics Aggregate Expenditure (AE)
More informationEcon 116 Mid-Term Exam
Econ 116 Mid-Term Exam Part 1 1. True. Large holdings of excess capital and labor are indeed bad news for future investment and employment demand. This is because if firms increase their output, they will
More informationAgenda. Productivity, Output, and Employment, Part 1. The Production Function. The Production Function. The Production Function. The Demand for Labor
Agenda Productivity, Output, and Employment, Part 1 3-1 3-2 A production function shows how businesses transform factors of production into output of goods and services through the applications of technology.
More informationAgenda. Saving and Investment in the Open Economy, Part 2. Globalization and the U.S. economy. Globalization and the U.S. economy
Agenda Globalization and the U.S. Economy Saving and Investment in the Open Economy, Part 2 Saving and Investment in Large Open Economies (LOE) The U.S. Current Account Deficit Fiscal Policy and the Current
More informationProblem Set #5-Key. Economics 305-Intermediate Microeconomic Theory
Problem Set #5-Key Sonoma State University Economics 305-Intermediate Microeconomic Theory Dr Cuellar (1) Suppose that you are paying your for your own education and that your college tuition is $200 per
More informationFundamental Economic Factors
Classical Model Real business cycle theory seeks to explain business cycles via the classical model. There is general equilibrium: demand equals supply in every market. An ideological conviction underlies
More informationPractice Problems on the Capital Market
Practice Problems on the Capital Market 1- Define marginal product of capital (i.e., MPK). How can the MPK be shown graphically? The marginal product of capital (MPK) is the output produced per unit of
More informationChapter 11. Keynesianism: The Macroeconomics of Wage and Price Rigidity. 2008 Pearson Addison-Wesley. All rights reserved
Chapter 11 Keynesianism: The Macroeconomics of Wage and Price Rigidity Chapter Outline Real-Wage Rigidity Price Stickiness Monetary and Fiscal Policy in the Keynesian Model The Keynesian Theory of Business
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Firms that survive in the long run are usually those that A) remain small. B) strive for the largest
More informationCARLETON ECONOMIC PAPERS
CEP 14-14 Employment Gains from Minimum-Wage Hikes under Perfect Competition: A Simple General-Equilibrium Analysis Richard A. Brecher and Till Gross Carleton University November 2014 CARLETON ECONOMIC
More informationProduction Possibilities Frontier and Output Market Efficiency. 1 Production Possibilities Frontier
Production Possibilities rontier. Principles of Microeconomics, all hia-hui hen October, Lecture Production Possibilities rontier and Output Market Efficiency Outline. hap : Production Possibilities rontier.
More informationIn following this handout, sketch appropriate graphs in the space provided.
Dr. McGahagan Graphs and microeconomics You will see a remarkable number of graphs on the blackboard and in the text in this course. You will see a fair number on examinations as well, and many exam questions,
More informationTHE ECONOMY AT FULL EMPLOYMENT. Objectives. Production and Jobs. Objectives. Real GDP and Employment. Real GDP and Employment CHAPTER
THE ECONOMY AT 29 FULL EMPLOYMENT CHAPTER Objectives After studying this chapter, you will able to Describe the relationship between the quantity of labour employed and real GDP Explain what determines
More informationProblem Set #3 Answer Key
Problem Set #3 Answer Key Economics 305: Macroeconomic Theory Spring 2007 1 Chapter 4, Problem #2 a) To specify an indifference curve, we hold utility constant at ū. Next, rearrange in the form: C = ū
More informationCH 10 - REVIEW QUESTIONS
CH 10 - REVIEW QUESTIONS 1. The short-run aggregate supply curve is horizontal at: A) a level of output determined by aggregate demand. B) the natural level of output. C) the level of output at which the
More informationPre-Test Chapter 10 ed17
Pre-Test Chapter 10 ed17 Multiple Choice Questions 1. Refer to the above diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE 1 to AE 2 would: A. move the economy from
More informationThe level of price and inflation Real GDP: the values of goods and services measured using a constant set of prices
Chapter 2: Key Macroeconomics Variables ECON2 (Spring 20) 2 & 4.3.20 (Tutorial ) National income accounting Gross domestic product (GDP): The market value of all final goods and services produced within
More informationPART A: For each worker, determine that worker's marginal product of labor.
ECON 3310 Homework #4 - Solutions 1: Suppose the following indicates how many units of output y you can produce per hour with different levels of labor input (given your current factory capacity): PART
More informationWhere are we? To do today: finish the derivation of the demand curve using indifference curves. Go on then to chapter Production and Cost
Where are we? To do today: finish the derivation of the demand curve using indifference curves Go on then to chapter Production and Cost Utility and indifference curves The point is to find where on the
More informationTHIRD EDITION. ECONOMICS and. MICROECONOMICS Paul Krugman Robin Wells. Chapter 19. Factor Markets and Distribution of Income
THIRD EDITION ECONOMICS and MICROECONOMICS Paul Krugman Robin Wells Chapter 19 Factor Markets and Distribution of Income WHAT YOU WILL LEARN IN THIS CHAPTER How factors of production resources like land,
More information3. George W. Bush is the current U.S. President. This is an example of a: A. Normative statement B. Positive statement
Econ 3144 Fall 2006 Test 1 Dr. Rupp Name Sign Pledge I have neither given nor received aid on this exam Multiple Choice Questions (3 points each) 1. What you give up to obtain an item is called your A.
More informationPOTENTIAL OUTPUT and LONG RUN AGGREGATE SUPPLY
POTENTIAL OUTPUT and LONG RUN AGGREGATE SUPPLY Aggregate Supply represents the ability of an economy to produce goods and services. In the Long-run this ability to produce is based on the level of production
More informationSection B. Some Basic Economic Concepts
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike License. Your use of this material constitutes acceptance of that license and the conditions of use of materials on this
More information14.02 Principles of Macroeconomics Problem Set 1 *Solution* Fall 2004
4.02 Principles of Macroeconomics Problem Set *Solution* Fall 2004 Part I. True/False/Uncertain Justify your answer with a short argument.. From 960 to 2000, the US, EU, and Japan all have experienced
More informationChapters 7 and 8 Solow Growth Model Basics
Chapters 7 and 8 Solow Growth Model Basics The Solow growth model breaks the growth of economies down into basics. It starts with our production function Y = F (K, L) and puts in per-worker terms. Y L
More informationEconomics I. General equilibrium and microeconomic policy of the state
Economics I General equilibrium and microeconomic policy of the state Course Objectives: The aim of the first lecture is to define the general equilibrium conditions of the economic system. Clarification
More informationLecture 9: Keynesian Models
Lecture 9: Keynesian Models Professor Eric Sims University of Notre Dame Fall 2009 Sims (Notre Dame) Keynesian Fall 2009 1 / 23 Keynesian Models The de ning features of RBC models are: Markets clear Money
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Econ 111 Summer 2007 Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The classical dichotomy allows us to explore economic growth
More informationINTRODUCTORY MICROECONOMICS
INTRODUCTORY MICROECONOMICS UNIT-I PRODUCTION POSSIBILITIES CURVE The production possibilities (PP) curve is a graphical medium of highlighting the central problem of 'what to produce'. To decide what
More informationINTRODUCTION THE LABOR MARKET LABOR SUPPLY INCOME VS. LEISURE THE SUPPLY OF LABOR
INTRODUCTION Chapter 15 THE LBOR MRKET This chapter covers why there are differences in wages: How do people decide how much time to spend working? What determines the wage rate an employer is willing
More informationI d ( r; MPK f, τ) Y < C d +I d +G
1. Use the IS-LM model to determine the effects of each of the following on the general equilibrium values of the real wage, employment, output, the real interest rate, consumption, investment, and the
More informationChapter 7. External Economies of Scale and the International Location of Production. Copyright 2012 Pearson Education. All rights reserved.
Chapter 7 External Economies of Scale and the International Location of Production Preview Types of economies of scale Economies of scale and market structure The theory of external economies External
More informationEcon 101: Principles of Microeconomics
Econ 101: Principles of Microeconomics Chapter 12 - Behind the Supply Curve - Inputs and Costs Fall 2010 Herriges (ISU) Ch. 12 Behind the Supply Curve Fall 2010 1 / 30 Outline 1 The Production Function
More informationMULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Suvey of Macroeconomics, MBA 641 Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Modern macroeconomics emerged from
More informationHow To Learn Economics In India
B.A. PROGRAMME DISCIPLINE COURSE ECONOMICS COURSE CONTENTS (Effective from the Academic Year 2011-2012 onwards) DEPARTMENT OF ECONOMICS UNIVERSITY OF DELHI DELHI 1 Syllabus for B.A. Programme - Economics
More informationLecture 1: The intertemporal approach to the current account
Lecture 1: The intertemporal approach to the current account Open economy macroeconomics, Fall 2006 Ida Wolden Bache August 22, 2006 Intertemporal trade and the current account What determines when countries
More informationMarket Supply in the Short Run
Equilibrium in Perfectly Competitive Markets (Assume for simplicity that all firms have access to the same technology and input markets, so they all have the same cost curves.) Market Supply in the Short
More informationECON 3240 Session 3. Instructor: Dr. David K. Lee
ECON 3240 Session 3 Instructor: Dr. David K. Lee Department of Economics York University Topic: Labor Supply and Public Policy: Readings: Ch 3 Please read the related topics from other microeconomics textbooks
More informationQE1: Economics Notes 1
QE1: Economics Notes 1 Box 1: The Household and Consumer Welfare The final basket of goods that is chosen are determined by three factors: a. Income b. Price c. Preferences Substitution Effect: change
More informationPPF. Microeconomics: Scarcity, Opportunity Cost & PPF
Muffins HOSP 2207 (Economics) Learning Centre Microeconomics: Scarcity, Opportunity Cost & PPF Economics is the study of how we allocate scarce resources. The problem with the world is that there will
More informationHave globalization pressures and the expansion of world trade
Globalization and the distribution of income: The economic arguments Ronald W. Jones* Department of Economics, University of Rochester, Rochester, NY 14627 This contribution is part of the special series
More informationHow To Understand The Industrial Revolution
Lecture 2 Industrial Revolution & trade Humber Dockside Hull 1881 by John Atkinson Grimshaw 1 Key features of the Industrial Revolution Impressive cost reducing technological breakthroughs in some significant
More informationProtection and Real Wages
Protection and Real Wages Wolfgang Stolper and Paul Samuelson (1941) Presented by Group Hicks Dena, Marjorie, Sabina, Shehryar No nation was ever ruined by trade Benjamin Franklin Under a system of perfectly
More informationEcon 336 - Spring 2007 Homework 5
Econ 336 - Spring 2007 Homework 5 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The real exchange rate, q, is defined as A) E times P B)
More informationECON4620 Public Economics I Second lecture by DL
ECON4620 Public Economics I Second lecture by DL Diderik Lund Department of Economics University of Oslo 9 April 2015 Diderik Lund, Dept. of Econ., UiO ECON4620 Lecture DL2 9 April 2015 1 / 13 Outline
More informationName: Date: 3. Variables that a model tries to explain are called: A. endogenous. B. exogenous. C. market clearing. D. fixed.
Name: Date: 1 A measure of how fast prices are rising is called the: A growth rate of real GDP B inflation rate C unemployment rate D market-clearing rate 2 Compared with a recession, real GDP during a
More information5. Suppose demand is perfectly elastic, and the supply of the good in question
ECON 1620 Basic Economics Principles 2010 2011 2 nd Semester Mid term test (1) : 40 multiple choice questions Time allowed : 60 minutes 1. When demand is inelastic the price elasticity of demand is (A)
More informationTHE MARKET OF FACTORS OF PRODUCTION
THE MARKET OF FACTORS OF PRODUCTION The basis of the economy is the production of goods and services. Economics distinguishes between 3 factors of production which are used in the production of goods:
More informationFigure 4-1 Price Quantity Quantity Per Pair Demanded Supplied $ 2 18 3 $ 4 14 4 $ 6 10 5 $ 8 6 6 $10 2 8
Econ 101 Summer 2005 In-class Assignment 2 & HW3 MULTIPLE CHOICE 1. A government-imposed price ceiling set below the market's equilibrium price for a good will produce an excess supply of the good. a.
More informationMicroeconomics Instructor Miller Practice Problems Labor Market
Microeconomics Instructor Miller Practice Problems Labor Market 1. What is a factor market? A) It is a market where financial instruments are traded. B) It is a market where stocks and bonds are traded.
More informationECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS
ECON 103, 2008-2 ANSWERS TO HOME WORK ASSIGNMENTS Due the Week of July 14 Chapter 11 WRITE: [2] Complete the following labour demand table for a firm that is hiring labour competitively and selling its
More informationAggregate Demand and Aggregate Supply Ing. Mansoor Maitah Ph.D. et Ph.D.
Aggregate Demand and Aggregate Supply Ing. Mansoor Maitah Ph.D. et Ph.D. Aggregate Demand and Aggregate Supply Economic fluctuations, also called business cycles, are movements of GDP away from potential
More information7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Chapter. Key Concepts
Chapter 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Key Concepts Aggregate Supply The aggregate production function shows that the quantity of real GDP (Y ) supplied depends on the quantity of labor (L ),
More informationKeynesian Economics I. The Keynesian System (I): The Role of Aggregate Demand
Keynesian Economics I The Keynesian System (I): The Role of Aggregate Demand Labor Market Excess supply and excess demand are not equally strong forces in the labor market. The supply of workers is such
More informationChapter Outline. Chapter 11. Real-Wage Rigidity. Real-Wage Rigidity
Chapter 11 Keynesianism: The Macroeconomics of Wage and Price Rigidity Chapter Outline Real-Wage Rigidity Price Stickiness Monetary and Fiscal Policy in the Keynesian 2008 Pearson Addison-Wesley. All rights
More informationEC306 Labour Economics. Chapter 3" Labour Supply and Public Policy
EC306 Labour Economics Chapter 3" Labour Supply and Public Policy 1 Objectives Income/payroll Taxes Income Maintenance Schemes Demogrant Social assistance/welfare Programs Negative Income Tax Wage Subsidy
More informationProduction Possibilities Frontier, Economic Growth, and Gains from Trade
Chapter 2 Production Possibilities Frontier, Economic Growth, and Gains from Trade A simple but powerful model of the economy is the production possibilities frontier (PPF) model. Economic growth and the
More informationECO 745: Theory of International Economics. Jack Rossbach August 26, 2015 - Week 1
ECO 745: Theory of International Economics Jack Rossbach August 26, 2015 - Week 1 Course Details Time & Location: 1:15-2:35 PM Wed & Fri in BA 214 Office Hours: 3:00-4:00 PM Wed in BA 109B (or by appointment)
More informationChapter 11 Capital and Saving, page 1 of 9
Chapter 11 Capital and Saving, page 1 of 9 capital fundamentalism: according to capital fundamentalism, capital is the key to development it was believed that after foreign aid helped western European
More information8. Average product reaches a maximum when labor equals A) 100 B) 200 C) 300 D) 400
Ch. 6 1. The production function represents A) the quantity of inputs necessary to produce a given level of output. B) the various recipes for producing a given level of output. C) the minimum amounts
More information3) The excess supply curve of a product we (H) import from foreign countries (F) increases as B) excess demand of country F increases.
International Economics, 8e (Krugman) Chapter 8 The Instruments of Trade Policy 8.1 Basic Tariff Analysis 1) Specific tariffs are A) import taxes stated in specific legal statutes. B) import taxes calculated
More information1 National Income and Product Accounts
Espen Henriksen econ249 UCSB 1 National Income and Product Accounts 11 Gross Domestic Product (GDP) Can be measured in three different but equivalent ways: 1 Production Approach 2 Expenditure Approach
More informationBADM 527, Fall 2013. Midterm Exam 2. Multiple Choice: 3 points each. Answer the questions on the separate bubble sheet. NAME
BADM 527, Fall 2013 Name: Midterm Exam 2 November 7, 2013 Multiple Choice: 3 points each. Answer the questions on the separate bubble sheet. NAME 1. According to classical theory, national income (Real
More informationChapter 18 of Blink and Dorton s IB Course Companion for Economics Section 3.4 of Matt McGee s Economics in Terms of the Good, the Bad and the
Chapter 18 of Blink and Dorton s IB Course Companion for Economics Section 3.4 of Matt McGee s Economics in Terms of the Good, the Bad and the Economist Section 3 of Constantine Ziogas IB Study Guide :
More information