Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

International Trade

734 views

Published on

Published in: Business, Technology
  • Be the first to comment

International Trade

  1. 1. Trade & Specialization
  2. 2. Question of the Day • There are two presidents buried at Arlington National Cemetary. One is John F. Kennedy. Who is the other one? • One of the first presidents in the 20th century. • William Howard Taft
  3. 3. Activity Rules • Inside voices. • No “forced” trades. (Don’t steal from each other) • You must vote every single round. • 3 minutes per trading session (I may shorten that if everyone appears to have finished)
  4. 4. • How many people made trades? • Which items were most popular? Least popular? Why? • Did anyone trade more than once? Why? Did anyone not trade? • How might we explain the satisfaction points on the board? • Was everyone happy with their trades? • If we were to observe 20 people buying groceries, what might we conclude about their gains and losses? Their wealth?
  5. 5. Trade Notes • Imports: Goods or services that an individual (or country) trades for. • Exports: Goods or services that an individual (or country) trades away. • What is the relationship between exports and imports?
  6. 6. Absolute vs. Comparative Advantage • Absolute advantage: When one nation can produce an item with fewer resources than another nation can. • Better technology, better production processes etc. • Comparative advantage: The ability to produce an item at a lower opportunity cost. • Countries or individuals will export (trade away) items they have a comparative advantage in producing. Why?
  7. 7. Barriers to Trade • Quota • Tariff • Export Subsidy • Why might a country put up barriers to trade? • What is the difference between a “quota” and a “tariff?”
  8. 8. The World Trade Organization
  9. 9. North American Free Trade Agreement • Canada, United States, & Mexico • Reduces tariffs and other barriers of trade between these countries. • Controversial • Why?
  10. 10. Today’s Take-Away • Free-trade, at least among individuals, makes everyone better off. • The WTO and NAFTA are organizations that promote free-trade but are very controversial. • We will discuss these more in-depth when we talk about current economic issues next week. • Countries and individuals trade what they are good at making for things they are not (comparative advantage)

×