Analyzing ricardian trade model

Reference no: EM1368696

Ricardo believed that the goal of economic analysis was to understand the distribution of income between the three major classes: capitalists, workers, and landowners. He also believed that the prices of commodities would be proportional to the labor embodied in the commodities, and be independent of the wage and profit rate. So that no matter what values the profit rate and wage rate takes on prices will remain the same. In system C "a rise in the wage is unambiguously an improvement in the real (i.e., physical) income of the workers. Changes in relative prices will be a consequence of solely of changes in the facility of production of commodities. Thus, it will be possible always to distinguish between objective and technical changes on the one hand and social or distributional changes in the other. To put the same point differently, it will always be possible to distinguish between a redistribution of the existing physical surplus and a technological change that alters the size and composition of the surplus."

1. Try to explain the above.
2. Was Ricardo able to provide a rigorous "proof" of his beliefs? Explain!!

Reference no: EM1368696

Questions Cloud

Compute the retrained earnings : Edgemont Company had revenues of $230,000 and expenses, including income taxes, of $190,000. On December 31, 2005 Edgemont had assets of $350,000,

Question about recapitalization : Cronwell Enterprises has total assets of $300 million. The corporation currently has no debt in its capital structure. The company's basic earning power is 15%.

Calculate the internal rate of return and net present value : Get Rich Company has to choose between two investment opportunities. Investment A requires an immediate cash outlay of $100,000 and provides after-tax income of $20,000 per year for ten-years.

How might argumentation differ in the classroom : Argumentation and Influence - School, Work, Home - How might argumentation differ in the classroom, daily life, and your job? To demonstrate this, select a position from a current event with which you are familiar.

Analyzing ricardian trade model : Ricardo believed that the target of economic analysis was to understand the distribution of income between three major classes: capitalists, workers, and landowners.

Show the : CS founders Gil and Hannah both realize that word of mouth and the few advertisements and reviews they have received is really not enough to propel the demand sufficiently to stay in business very long.

Question related to medical office procedures : Prepare a new office protocol pertaining to billing and cash management and describe the relationship of the new protocol with other existing polices

Making a statement of cash flows : Given the following data, manke, in good form, an income statement for the Dental Drilling Company as of December 31, 2003.

Question related to collective bargaining : Why might unionized older workers engaged in bargaining a labor contract not restrain their wage demands even though the demand for their labor is very elastic?

User Account

All Pages