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Trade and Technology: The Ricardian Model - Faculty

Trade and Technology: The Ricardian Model - Faculty

Opportunity cost (cont.)

Opportunity cost (cont.) International Commercial Policy The Ricardian Model Notice that Ecuador has a lower opportunity cost of producing roses. Ecuador can produce 10 million roses, compared to 30,000 computers that it could otherwise produce. The US can produce 10 million roses, compared to 100,000 computers that it could otherwise produce. 8


Opportunity cost (cont.) International Commercial Policy The Ricardian Model Notice also that the US has a lower opportunity cost of producing computers. Ecuador can produce 30,000 computers, compared to 10 million roses that it could otherwise produce. The US can produce 100,000 computers, compared to 10 million roses that it could otherwise produce. Hence, the US can produce 30,000 computers, compared to 3 million roses that it could otherwise produce. 9


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