PPT-Module 4-”Comparative Advantage and Trade”

Module 4Comparative Advantage and Trade By JASACCO Absolute and Comparative Advantage CountriesIndividuals trade to maximize production specialization is the KEY Absolute Advantage One nation can produce more output with the same quantity of inputs factors of production as the other. A2 Economics. Aims and Objectives. Aim: . Understand the theory of absolute and comparative advantage.. Objectives: . • Define the theory of absolute . and comparative . advantage. .. Analyse the effects of specialisation. Comparative . Advantage. Prof. Christopher Balding. February 20, 2014. Absolute Advantage. Absolute Advantage cont.. Can We Trade under Absolute Advantage?. Absolute Advantage Trade in Pictures. What Happens to . Introduction. Introduction. International Trade Growth. International Trade Milestones. Largest Exporting & Importing Countries. International Trade Drivers. International Trade Theories. The International Business Environment. EQ: How do we gain from trade?. What was the most important. document written in 1776?. written by. Adam Smith. The Father of Economics. The Wealth of Nations. He is my great, great, great, great, . Terms of Trade. Graph the Following PPCs. Shirts. (millions). Wheat. (millions. of bushels). China. 25. 50. USA. 50. 200. Values represent all resources spent on one good. (the other value is 0). Which country has an absolute advantage in shirts?. Why countries trade. Absolute advantage. A country has an absolute advantage when it can . produce more goods and services than other countries with the same level of inputs (lower cost/unit). Germany might be able to produce more cars than the UK with the same inputs and more . What does it mean to globalize the Economy?. Comparative and Absolute Advantage. A country has an . absolute advantage. when it has the ability to produce more of a given product using a given amount of resources.. Corn. Wheat. 5. 6. 6. 9. Because the PPF gradients are different, these two countries have different opportunity costs between Corn and Wheat . they will trade!. **Opportunity cost = sacrifice/gain. Lecture 17. Chapter 2, 7. Trade, and Comparative Advantage. 2017 Economics 101 CCC. content. Trade Terminology. Canada and Trade . Production Possibilities Frontier. Comparative & Absolute Advantage. Absolute Advantage. Absolute advantage is when someone is the best at doing something. America is the best at producing entertainment. Colt . Brennann. (Hawaii) is the best at throwing touchdown passes. Imagine that you are the manager of a fast-food restaurant. You are outgoing, interact well with customers, and work the cash register proficiently. You are also efficient in the kitchen and can manage several tasks at once, such as making pizzas, preparing salads, and filling drinks. . 8.1 . The Production Possibilities Curve. 8.2 The Basis for Trade: . Comparative . Advantage. 8.3 Trade between States. 8.4 Trade between Countries. 8.5 Arguments against Free . Trade. Key Ideas. 1. The production possibilities curve tells us. An Inquiry in the Nature and Causes of the Wealth of Nations (. 1776). “It is a maxim of every prudent mast of a family, never to attempt to make at home what will cost him more to make than to buy. The tailor does not attempt to make his own shoes, but buys them of the shoemaker. The shoemaker does not attempt to make his own clothes but employs a tailor.”. MSc in Economic Policy Studies. John FitzGerald, March 2015. Course Outline. How does an economy work? JF . 16-1-2015. The genesis of macroeconomics . AM. 23-1-2015. Modern macroeconomics . AM. 30-1-2015.