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Understanding Global Market. David Ricardo shapes modern economy. It is better to trade than to produce everything on your own. If You Were Sumanto , What Would You Do?.
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It is better to trade than to produce everything on your own
If You Were Sumanto, What Would You Do? • Sumanto is a gifted painter as well as superb carpenter. He need one day to finish a drawing, as well as a furniture. A painting is worth $400 and a furniture is worth $350 • Sumanto’s neighbor called Hannibal, is exactly as skillful as he is. The only difference, Hannibal needs 3 days to finish a painting and 1.5 days for a furniture. • You absolutely have advantage over Hannibal. DO YOU? ;)
Let’s Compare!! Before Trade After Trade (Specialization) For 6 day work, Sumanto earned $2400 in total VS Hannibal $1400 Total production is 10 unit • For 6 day work, Sumanto earned $2250 in total VS Hannibal $1100 • Total production is 9 production unit
Comparative advantage stipulates that countries should specialize in a certain class of products for export, but import the rest - even if the country holds an absolute advantage in all products
Factor Proportion Theory revises Ricardo’s theory. It explains the factor behind Comparative Advantage.
ManfaatPerdaganganInternasional • Menghasilkandevisanegara • Memperolehbarang yang tidakdapatdiproduksidinegarasendiri • Buah Kiwi & Cherry • Memperolehbarangdenganhargamurah • Hargagula putihmeroket, pemerintahimporgula putih • Memperluaspasardanmenambahkeuntungan • Economy of scale • Menimbulkanlapangankerja • Meningkatkankemampuan SDM yang handal • Transfer teknologi modern