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Global Econ - Intro to Trade - lecture

Global Econ - Intro to Trade - lecture

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Published by Katherine Sauer
overview of international trade basics
overview of international trade basics

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Categories:Types, School Work
Published by: Katherine Sauer on Jun 16, 2010
Copyright:Attribution Non-commercial

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02/10/2011

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International Trade: Basics
Dr. Katherine Sauer Global Economic IssuesECON 241
 
I. Why do nations trade?Why do nations export?-individuals/firms produce more than can be consumedat home-sellers could receive a higher price in a foreign marketWhy do nations import?-some goods can¶t be produced at home (or not enough)-some goods are produced at a lower cost or moreefficiently elsewhere-consumers like variety
 
II. Absolute and Comparative AdvantageDue to differences in supply conditions, a country may be ableto produce more of a good at a lower cost.-superior technology-large factor (resource) endowmentsAbsolute advantageis the ability to produce a good at the lowestcost.It implies a potential trade pattern.ex: tropical countries produce and export bananascoastal countries produce and export seafoodIt gives an incentive to specialize in a good and export it.

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