EC 340 Lecture Notes - Lecture 2: Opportunity Cost, Comparative Advantage, Wassily Leontief
Document Summary
Vocabulary and definitions in the heckscher-ohlin model: factors of productions, consists all inputs used in producing goods and services, labor: all human inputs; measured by hours, # of workers, days of work, etc. Wage rate of labor: earned wages: land: farm and urban landscape, and all natural of natural resources (including wind, sunshine); measured as units of land (e. g. building rent) Rental rate of land: income earned by landowners: capital: machines, tools, and buildings used in production of goods; measured by. units of capitals or # of units (e. g. renting out machines) Capital abundant: supply of capital per worker is higher: ex. Intensity: used to describe differences in factor usage across industries: ex. Capital intensive good: more capital per unit: oli framework: ownership, location, and internationalization, attempts to explain the pattern of international investment. Factor supplies and production possibilities in the heckscher-ohlin model.
