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- Title
Teaching an Inverted "Ricardian" Argument to Help Students Solve Comparative Advantage Problems.
- Authors
Castillo, José; Smith, Steve
- Abstract
The concept of opportunity cost is introduced in international economics (IE) as a nation's tradeoff between producing one good versus another in the "Ricardian" model, where students come to understand an economy as varying along the input of labor only. As simple as it sounds however, the idea turns out to be one of the most difficult concepts business students face. After being taught the simple "Ricardian" argument (i.e., labor as the only variable), students are taught the more "modem" theories of international trade where countries are modeled as "endowed" with varying degrees of land, capital, and labor (in terms of skilled or unskilled laborers), that require more elaborate arguments of trade under such conditions. But, without a solid foundation in Ricardo's "comparative advantage," students face tough challenges in any IE course. We offer a simple way of helping students makes sense of these basic IE concepts.
- Subjects
INTERNATIONAL economic relations; COMPARATIVE advantage (International trade); OPPORTUNITY costs; CURRICULUM; RICARDIAN equivalence theorem; SKILLED labor; BUSINESS students; EDUCATION
- Publication
Business Education Innovation Journal, 2016, Vol 8, Issue 2, p205
- ISSN
1945-0915
- Publication type
Article