TOPICS
- Why do we trade?
- Absolute Advantage, Comparative Advantage, and the
Gains from Trade
- Terms of Trade
OUTCOMES
why do the gains from
trade appear to be hidden from many people?
what is the economic basis for
specialization and exchange (trade)?
calculate the opportunity costs
using straight line production possibilities
define and find absolute advantage
and comparative advantage using straight line (constant
costs) production possibilities
calculate how specialization and
trade increases output using the production
possiblilities tables or graphs of two different
countries (i.e. calculate the gains from
trade)
compute the minimum and maximum
terms of trade
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