E GAIN FROM TRADE

DOES TRADE MAKE EVERYONE

BETTER OFF?
3rd Meeting

00. 00. 20XX

Does trade make everyone
better-off?

There are two people, Happy and Andy

who were stranded in an island.
In order to survive, they have to eat.
They search the surroundings, and find
Happy Andy banana trees and fishing spot.
Fortunately, both are athletes. Happy is known
as world no.1 Mountain climbing athlete.
Andy is world national swimming champion.
 Does trade make everyone
better-off?
In a week, Happy has two options. Either
A
100 She climbs trees to get some bananas or to
catch some fish.

75
If within a week She chooses to climb all
trees in the island to get bananas she will
get 100 bananas.  Point A.
C
50
If within a week She chooses to catch fish
in the sea, she will get only 50 Fish. 
D
Point B.
25
Happy
Good in climbing Or, if she want, She can split the activities.
1 Week: 100 Bananas First half week, get some Bananas and the
B
Or 50 Fish 0 second half week get some fish. This will
0 25 50
make her have 50 bananas and 25 fish 
Point C.
How about Point D?
 Does trade make everyone
better-off?

100
The yellow area is the possible combination of
Banana and Fish that Happy can get in a week.
75
The blue line is the highest amount of banana and fish
E
She able to get. The area below the line means, She
is not efficient. (for example Point D)
50
D The area above the line is the area of
Happy banana and fish that impossible to get by
Possible Combination 25 Happy (for example Point E)

0
0 25 50
Does trade make everyone
better-off?
In a week, Andy has two options. Either He
100
climbs trees to catch fish or get some
bananas.
75 If within a week He chooses to catch fish in
the sea, he will get 100 fish.  Point A.
B
50 If within a week He chooses to climb all
trees in the island to get bananas he will
Andy C get only 50 bananas.  Point B.
Good in fishing 25 D
1 Week: 100 Fish Or, if He want, He split the activities. First
Or 50 Banana half week, get some Bananas and the
A
0 second half week get some fish. This will
0 25 50 75 100
make him have 50 fish and 25 bananas 
Point C.
How about Point D?
Does trade make everyone
better-off?
100
The blue area is the possible combination of
Banana and Fish that Andy can get in a week.
75
The blue line is the highest amount of
E
banana and fish He able to get. The area
50 below the line means, He is not efficient.
Andy (for example Point D)
Possible Combination
D
25 The area above the line is the area of
banana and fish that impossible to get by
Andy (for example Point E)
0
0 25 50 75 100
 Does trade make everyone
better-off?
100
100

75
75

50 50

25 25

0 0
0 25 50 0 25 50 75 100
Happy Andy
Possible Combination Possible Combination
Does trade make everyone
better-off? t,
e be s ta
o w h at sh e s on
o d us
y d ec ide t e k, s he foc
o s e H app th i n a we
Supp b ing . Wi
clim
that is ananas.
B
getting
Andy

e b es t at,
do w hat h c uses
e t o e f o
Happy a l s o decid n a week, H g fi s h.
And y W ith i a t ch in
i ng . on c
fish
that is
Does trade make everyone
better-off?
So, in the end of the
0
week, Happy will have
100 bananas.
TheyWhat
agreewill they do
to trade if Happy in exchange for 1 Fish.
1 Bananas Andy
want to eat Fish and Andy
Suppose both of them, want to exchange half of what 100
want to eat some Bananas?
they owned. Andy, in the end
100
Happy wantwill
They to exchange
trade. 50 Bananas for 50 Fish
of the week will
Happy Andy want to exchange 50 Fish for 50have Bananas
100 fish.
0
Does trade make everyone
better-off?

50
100 50
TRADE

Happy Andy
50
50
100
Does trade make everyone
better-off?
After trade, now happy could consume fish. 100
Now She has 50 Bananas and 50 Fish.
Happy
75
50

50 LETS SEE ON HAPPY’S G

ATTAINABLE GRAPH 50

25
Before trade with Andy, She could not consume 50 Bananas and
50 Fish. This point is not attainable by her (Point G)
After trade, she could consume more Fish. 0
0 25 50
 Does trade make everyone
better-off?
100
After trade, now Andy could consume Banana.
Now He has 50 Bananas and 50 Fish.
75 Andy

F LETS SEE ON ANDY’S

50 50
ATTAINABLE GRAPH

25
50

Before trade with Happy, He could not consume 50 Bananas and

0
50 Fish. This point is not attainable by him (Point F)
0 25 50 75 100 After trade, He could consume more Banana.
Does trade make everyone
better-off?

Yes, trade makes both side consume more than ever produce by their
own. This is the gain that everyone get from trade.
Thanks !
See you in the next meeting