Average cost per unit
Average cost = total input required / quantity produced
To show economies of scale numerically. Compute it at two output levels; a falling figure is economies of scale, a rising one is diseconomies.
- Total input
- Labour or cost required at that output, often a fixed part plus a variable part
- Quantity
- Units produced in the period
Labour saving from concentrating production
Saving = (labour for each country separately, summed) - (labour for one country producing the whole output)
The class's demonstration that identical countries gain from trade. With labour = fixed + quantity, the saving equals the fixed requirement that is eliminated.
- Fixed requirement
- The part of labour that does not vary with output, 5 in the class table
Intra-industry trade index
T = 1 - |X - M| / (X + M)
To measure how much of a country's trade in an industry is two-way. T = 0 means one-way trade only; T = 1 means exports equal imports. State the level of industry aggregation, because widening it raises T.
- X
- Value of exports of that industry or commodity group
- M
- Value of imports of the same group