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INTERNATIONAL ECONOMICS

INTERNATIONAL ECONOMICS. Reasons for trade. Coffee from: An apple from: A pencil from: A computer from: Clothes from: ¿WHY? Differences in factor endowments Variety and quality of goods Gains from specialization Political. Why countries trade? . Factor endowments:

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INTERNATIONAL ECONOMICS

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  1. INTERNATIONAL ECONOMICS

  2. Reasons for trade • Coffee from: • An apple from: • A pencil from: • A computer from: • Clothes from: ¿WHY? • Differences in factor endowments • Variety and quality of goods • Gains from specialization • Political

  3. Why countries trade? • Factor endowments: • If a country can produce a good at a lower opportunity cost than the other, it has a comparative advantage. • Gains from trade are gains of increased specialization amongst nations. • Where land is cheap but Labour is expensive, will produce more ______ intensive goods. And the opposite. • Comparative advantages in the production of goods and services in which they have relatively __________ (scarce or abundant?) endowments of natural resources.

  4. Chapter 15 Figure 15-6 Triangular Trade Benefits All

  5. Chapter 15 Figure 15-1 American Production Data

  6. Chapter 15 Figure 15-2 Comparative Advantage Illustrated

  7. Chapter 15 Figure 15-2 Comparative Advantage Illustrated

  8. Chapter 15 Figure 15-3 America before and after Trade

  9. Chapter 15 Figure 15-4 Free Trade Allows the World to Move to Its Production-Possibility Frontier

  10. Variety and quality of goods / gains from specialization. • Example: Case study: Chile: Salmon.

  11. Political

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