By Edmond Conway
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In many sub-Saharan African countries, the land produces so little food that the vast majority of people have to work in subsistence farming. When they boost agricultural output by using new technologies to grow more crops, their populations balloon, and the famines that often follow in years of bad harvests keep the population from growing and becoming richer in the ensuing years. Apocalypse when? Neo-Malthusians argue that although human ingenuity has managed to delay the catastrophe for a couple of centuries, we are now on the brink of another crunch.
Demand represents the amount of goods or services people are willing to buy from a vendor at a particular price. The higher the price, the less people will want to buy, up to the point when they simply refuse to buy at all. Similarly, supply indicates the amount of goods or services a seller will part with for a certain price. The lower the price, the fewer goods the vendor will want to sell, since making them costs money and time. ’ Alfred Marshall, Victorian economist The price is right? Prices are the signal that tell us whether the supply of or demand for a particular product is rising or falling.
Not so. In this case, if England devoted all its resources to producing cloth and Portugal likewise concentrated on wine, they would, together, end up producing more cloth and wine. Portugal could then trade its excess wine in exchange for English cloth. This is because, in our example, England has a comparative advantage in making cloth, as opposed to wine, where it is so much less efficient than the Portuguese. The father of comparative advantage, economist David Ricardo, used this example in his groundbreaking 1817 book On the Principles of Political Economy and Taxation.