comparative advantage and the gains from trade quizlet

Video transcript - [Instructor] In other videos we have already looked at production possibility curves and output tables in order to calculate opportunity costs of producing a certain product in a certain country. Suppose that Germany decides to become self sufficient in bananas and even export them. Practice: Comparative advantage and the gains from trade. According to the theory of comparative advantage, countries gain from trade because a. For example, suppose the U.S. can produce two more tables if it produces one less cabinet. A)Rob has a comparative advantage in catching fish. Further assume that consumers in both countries desire both these goods. If both of them focus on producing the goods with lower opportunity costs, their combined output will increase and all of them will be better off. Practice: Comparative advantage and the gains from trade. a. COMPARATIVE ADVANTAGE AND GAINS FROM TRADE 1. Solved Problem 2.2 Comparative Advantage and the Gains from Trade c. Illustrate your answer to question (b) by drawing a PPF for the United States and a for Canada. The concept of comparative advantage suggests that as long as two countries (or individuals) have different opportunity costs for producing similar goods, they can profit from specialization and trade. Fall Term 2019 Comparative Advantage Study Questions (with Answers) Page 4 of 7 (9) 7. When countries such as the U.S. promote production of domestic cotton, developing countries that produce cotton are hurt. Comparative advantage is the ability of a nation to produce a good or service at a lower opportunity cost than other nations. For example Poor countries can trade production of primary goods with manufactered goods produced by developed countries. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Lesson summary: Comparative advantage and gains from trade. This video is designed to provide a review of the Foreign Exchange Market Model. 3 INTERDEPENDENCE AND THE GAINS FROM TRADE https://www.teacherspayteachers.com/Store/Darrens-Store Choose from 500 different sets of gains from trade flashcards on Quizlet. Lesson summary: Comparative advantage and gains from trade. Soon, the German industry is competitive and able to sell bananas at the lowest price anywhere. The gains from trade: the improvement in national welfare is known as the gains from trade. does not exist since the tax incentives do not reduce the high opportunity cost for German banana production. A country has an absolute advantage in those products in which it has a productivity edge over other countries; it takes fewer resources to produce a product. lustrates comparative advantage and gains from trade - where trade occurs due to technology differences across countries. Comparative advantage theory of international trade. The theory of comparative advantage explains why countries trade: they have different comparative advantages. The essential point is that Roadway will produce more of the good—trucks—in which it has a comparative advantage. COMPARATIVE ADVANTAGE AND GAINS FROM TRADE 1. Student Handout C. Student Handout D. Student Handout E. Student Handout F. Spanish Reading. Absolute advantage and comparative advantage are two important concepts in economics and international trade… Comparative Advantage and the Gains from Trade 1. Comparative advantage and international trade, - many nations trade with many other nations, - goods/services that are purchased out of nation by a nation, - goods/services sold by a nation to out of nation countries, - this is when there is an increase in economic linkage between different countries, - this is the phenomenon of extremely high levels of inter nation trade, 1. production possibilities and comparative advantage, - comparative advantage = when providing a good/service for a nation has less opportunity cost than another nation, - this graph analyzes international by assuming that the oppurtintiy cost is constant or in other words a straight line, - this is when a nation is self sufficient and does not trade with other nations, - as a result of trade , each nation can now specialize in their speciality, 3. comparative advantage vs. absolute advantage, - comparative advantage = producing a good will led to a lower opportunity cost than other nation, - productive nations = workers are paid higher wages cuz of competition between employers, misinterpretation about trade with poorer nations, - a nations climate can greatly affect comparative advantages in the agricultural market, - imporntat concepts of factor endowment include, - this term refers to how much supplies of a production factor does a nation posses, - this refers to how much resources are used to produce a factor in comparison to other goods, - this states that a nation has a comparative advantage if, - if a nation has more advance tech, then it is easier to produce a good, - basically the same as a demand except that this only shows the quantity demanded at each price for only national citizens not international costumers, - basically the same as a supply curve except it only shows the quantity supplied at each price for national suppliers not international supplier, - this is shown at the intersection of the domestic supply/demand curve, world price (lower price than domestic price), - this is the price of a good that can be bought/sold overseas, - this creates winners/loser as in any econ, effects of exports if the world price is higher than domestic price, - in this scernaio supplier buy goods locally and sell overseas, - in international trade there are two industries in a nation, - these are industries that produce goods/services for overseas export, - these are industries that must compete with products that are importatnted, international trade affects on factors of production, - other ways that international trade affects domestic trade. 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comparative advantage and the gains from trade quizlet 2021