Podcast
Play an AI-generated podcast conversation about this lesson
Questions and Answers
According to the text, which argument suggests that free trade exploits less productive countries?
According to the text, which argument suggests that free trade exploits less productive countries?
- Exploitation argument (correct)
- Pauper labor argument
- Productivity and competitiveness argument
- Relative productivity and multi-commodities case
What does the 'pauper labor argument' in free trade theory emphasize?
What does the 'pauper labor argument' in free trade theory emphasize?
- The importance of high wages in promoting fair competition
- The role of skilled labor in driving international trade
- The need for strict regulations on labor productivity
- The detrimental effects of low wages on other countries (correct)
In the context of international trade, what is the main insight of the Ricardian model?
In the context of international trade, what is the main insight of the Ricardian model?
- Gains from trade are not influenced by relative wages
- Labor productivity is irrelevant in determining comparative advantage
- Absolute advantage determines trade patterns (correct)
- Trade occurs only when countries have identical resource endowments
In the Ricardian model, what is the role of relative productivity in determining comparative advantage?
In the Ricardian model, what is the role of relative productivity in determining comparative advantage?
Signup and view all the answers
What is one of the assumptions of the Ricardian model of international trade?
What is one of the assumptions of the Ricardian model of international trade?
Signup and view all the answers
Flashcards are hidden until you start studying
Study Notes
Free Trade and Exploitation
- The argument that suggests free trade exploits less productive countries is the "pauper labor argument".
Pauper Labor Argument
- The pauper labor argument in free trade theory emphasizes that low-wage labor in developing countries is exploited by multinational corporations.
Ricardian Model
Main Insight
- The main insight of the Ricardian model in international trade is that countries should specialize in producing goods for which they have a comparative advantage.
Role of Relative Productivity
- In the Ricardian model, relative productivity plays a role in determining comparative advantage, as countries specialize in goods where their productivity is higher compared to other countries.
Assumptions of the Ricardian Model
- One of the assumptions of the Ricardian model of international trade is that there are only two goods and two countries.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
