Introduction to Economics

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Heath, 1922 - Economics - 481 pages
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Page 388 - Whether there is any justice in this distinction between the two branches of trade is a question that we must defer to the next chapter. For the present, we are concerned with the conditions giving rise to international trade and the mechanism by which it is carried on. All permanent trade is based upon differences in character of productive powers. To employ a simple example, drawn from the field of local trade, if A can make three pairs of shoes in a day while B can make only two, and B can cut...
Page 395 - International trade based upon differences in relative supply of capital can not long persist if capital flows easily from country to country. So long as England was par excellence the land of capital, and so long as English capitalists were unwilling to invest their funds in foreign lands, there were many branches of manufacture that could be prosecuted to greater advantage in England than in other countries. In practically every branch of manufacture, in fact, the interest on capital makes up a...
Page 391 - A modern example of the same sort of trade is the exchange of iron and steel products for teas, coffee and spices between England on the one hand and the East Indies on the other. In general, the trade between countries in the temperate zone and countries in the torrid zone is largely of this character. Trade having this basis is naturally permanent; with every reduction in costs of transportation it tends to increase. Decline in railway and ocean shipping charges places more and cheaper tropical...
Page 287 - Quarterly, vol. ii, p. 610. labor. Profit in the economic sense of the term is not essential to the continued operation of an established enterprise. Profit in the business sense of the term is a necessary income, since no one would remain long in a business unless he obtained a return representing interest on his capital and wages for his labor.
Page 287 - ... cease, these also cease." 4 AS Johnson has made a rough but useful distinction between the surplus concept of profits and profits in the business sense of the term : " A surplus remains in the hands of the enterpriser after all costs have been met. This surplus is known in economics as ' pure profits,' or more simply as
Page 408 - ... entire sum. But suppose that after shipping the wheat, and before giving orders for the delivery of the gold, he meets B, a New York importer, who is about to order $10,000 worth of woollen goods from Y, a Liverpool exporter. If B were to ship the $10,000 in gold to Liverpool, it would cost him $60 for freight and insurance. Now, if A will give B an order instructing X to pay Y the $10,000, instead of remitting it to himself, B can pay A the $10,000 that he would otherwise have remitted to Y....
Page 409 - A who are anxious to dispose of bills of exchange, he is likely to offer less than par for A's bill. If one of the holders of bills will not sell at a low price, another probably will. If, on the other hand, A thinks that he can easily find other persons besides B who have payments to make abroad, and who are anxious to purchase bills for the purpose, he is likely to hold his bill at a price above par. In general terms, when the volume of bills offered for sale appears to exceed the volume of remittances...
Page 409 - A had demanded $10,060, it would have been a matter of indifference to B whether he bought the bill or shipped the gold. $10,060 is then the very highest price that a $10,000 bill can be made to fetch. When a bill of exchange sells for just its face value, it is said to be at par ; when for more or less, it is above or below par. We have now to inquire under what conditions bills will be at par, or above or below par. If the importer whom we designated as B thinks that the chances are good that he...
Page 392 - Furthermore, we are, as a people, gradually learning to appreciate the good qualities in tropical products that a short time ago we held in slight esteem; and we may assume that a corresponding evolution is taking place in the tastes of the inhabitants of the tropics. 4. Each one of two trading nations may be able to produce all classes of commodities that are the objects of exchange between them. In this case, the one is likely to enjoy greater relative advantages for the production of one claaa...
Page 409 - It would have been more profitable for him to take $9,950 than to incur the expense of importing the gold. If B had offered $9,940, it would have been a matter of indifference to A whether he sold his bill to B or imported the gold. $9,940 is evidently the very lowest price at which the bill would be sold. On the other hand, if A had been unwilling to part with his bill for just $10,000, B might have offered more, for he could better have afforded to pay $10,050 for the bill than stand the expense...

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