INTERNATIONAL TRADE

Given (DTOT):

US 1 F = 1 lh = 1/2 C (COMPARATIVE ADVANTAGE)

1 C = 2 lh = 2 F

Europe 1 F = 3 lh = 3/4 C

1 C = 4 lh = 4/3 F (COMPARATIVE ADVANTAGE)

ITOT US gds US lh Europe gds Europe lh

1 F = 2/3 C 1/3 C ∀ 2 F ½ lh saved

∀ 3/2F

1/8 F ∀ ¾ C ½ lh saved

∀ 1C

1 F = 1 C 1 C ∀ 2 F 1 lh saved ∀

1F

-1/4 F ∀ ¾

C

1 lh lost ∀

1C

1 F = 1/4 C -1/2 C ∀ 2 F 2 lh lost ∀

4F

2 F ∀ ¾ C 2 lh saved ∀

¼ C

1 F = 3/4 C 1/2 C ∀ 2 F 2/3 lh saved

∀ 4/3 F

Ø Ø

1 F = 1/2 C Ø Ø 1/2 F ∀ ¾ C 1 lh saved ∀

½ C

1 F = 2/5 C -1/5 C ∀ 2 F ½ lh lost ∀

5/2 F

7/8 F ∀ ¾ C 7/5 lh saved

∀ 2/5 C

1 F = 4/7 C 1/7 C ∀ 2 F ¼ lh saved

∀ 7/4 F

5/16 F ∀ ¾

C

5/4 lh saved

∀ 1 C

**OMG WAIT HEHE CAN SOMEONE RECHECK THE GIVEN AND

ANSWERS!!! I JUST GOT THAT FROM SOMEWHERE YEAAAAH LABYU

ALL**

How to solve for goods: (LONG METHOD)

For example: Given the DTOT stated above and ITOT 1F = 2/3 C

US 1C + 1F (Before Trade)

2F + 1F (to be exported)

4/3 C + 1F (IMPORTED; After Trade)

Thereforeeeee...

4/3 C (after trade) – 1C (before trade) = 1/3 C gained for every 2F

exported!

Europe 1F + 1C (Before Trade)

¾ C + 1C (to be exported)

9/8F + 1C (IMPORTED; After Trade)

Thereforeeeee...

9/8F (after trade) – 1F (before trade) = 1/8 F gained for every ¾ C

exported!

How to solve for labor hours: (LONG METHOD)

Given the same DTOT and ITOT:

US 1F + 1C (Before Trade) = 3 hours

1F + 3/2 F (use ITOT)

1 lh + 3/2 lh (After trade) = 5/2 hours

Thereforeeeee…

3 hours (before trade) – 5/2 hours (after trade) = ½ hour saved for every

3/2 F exported!

Europe 1F + 1C (Before Trade) = 7 hours

2/3 C + 1C (use ITOT)

8/3 lh + 4 lh (After Trade) =20/3 hours

Thereforeeeee…

7 hours (before trade) – 20/3 hours (after trade) = 1/3 hours saved for

every 2/3 C exported!

How to solve for goods: (SHORTCUT METHOD)

Given the same DTOT and ITOT:

US ITOT – DTOT = clothers per food

(1F = 2/3 C) – (1F = ½ C) = 1/6 clothes per food exported

How to solve for labor hours: (SHORTCUT METHOD)

Make it like parang stoichiometry lang, y’know

Uhuh, uhuh!! Dimensional Analysis omg soooo freaking fetch!

Given the answer above (1/6 clothes per food exported):

1 clothing x _2 hours_ = _1 hour_

6 food clothing 3 food

ALWAYS REMEMBER aka CAUTION WHEN SOLVING FOR THE LABOR

HOURS!!!!

When using the Long Method, a negative answer does not mean

that the answer is right! Because it means that it’s wrong

hahahahaha because yeah hirap i-explain dito Facebook

message nalang

However, when using the Shortcut Method, a negative answer is

always right! YEAH!!!!

** Kaya niyo na isolve yung sa Europe, tinatamad na me omg!!! THE

BUZZ NA EH HEHEHEHEHEHEHE **