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Trade and Technology: The Ricardian Model - Faculty

Trade and Technology: The Ricardian Model - Faculty

Autarky: PPF

Autarky: PPF International Commercial Policy The Ricardian Model The production possibility frontier (PPF) of an economy represents the maximum amount of goods that can be produced for a fixed amount of resources. If Q C represents the quantity of cheese produced and Q W represents the quantity of wine produced, then the production possibility frontier of the domestic economy has the equation: 16
 Labor required for each unit of cheese production a LCQ C
+
a LWQ W
=
L Total units of cheese production Labor required for each unit of wine production Total amount of labor resources Total units of wine production

Autarky: PPF (cont.) 17
 International Commercial Policy The Ricardian Model

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