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Posted by Colie 0 kommentarer

Different theorems used in International Economy:


The Ricardian theorem
- Trade is driven by different labour productivity. A country chooses to produce the good which they have a comparative advantage in producing (lowest opportunity cost).

The Hecsher-Ohlin theorem (Yay Swedes!)- Trade is driven by different resources. A country produces more of the product that requires the factor they are abundant in.

The Stolper Samuelson theorem - Trade benefits the abundant factor and harms the scarce factor in each country.

The Rybczynski Theorem
- If the relative price is fixed and given that both goods continue to be produced. If the economy's supply of a factor of production increases, then the output of the good that uses this factor intensively will increase and the output of the other good decrease. A biased expansion of production possibilites.
(will be updated)


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