Why do
Nations Trade?
profit
specialization
exotic
products
need for
raw
materials
lack of
goods
at home
BW: why do nations trade?
Questions to consider for 16­1:
What is the relationship between a state
or nation’s exports and its specialization?
What is the assumption on which the
concept of comparative advantage is
based?
formative assessment
1
if you want to find what a country
specializes in, look at its exports
if you want to see what a country
would like to have but doesn't
produce as efficiently, look at its
imports
exports/imports
absolute means "ultimate or unquestionable"
comparative means "related to a comparison
between things"
absolute/comparative
2
Pull
when does a country have absolute
advantage?
when it can produce more of a product than another country
Pull
explain what opportunity cost has to
do with comparative advantage
if a country can produce a good or service at a lower opportunity cost than another country, it has the comparative advantage
absolute/comparative check
Graphs in Motion|the Gains From Trade
p444 in text
graph in motion
3
16­1
Grade: 11
Subject: economics
Date: 02.25.10
questions for comprehension
1
Why do nations trade with one another? (select all that
apply)
A
lack of goods at home
B
need for raw materials
C
specialization
D
exotic products
E
profit
#1
4
2
Specialization and trade benefits both trading
partners by allowing each to produce the things
they do best and exchange those products for the
things that other people do best.
True
False
#2
3
The basis for international trade stems from
A
absolute advantage.
B
the differences in opportunity costs from one
country to another.
C
bartering.
D
the similarity in opportunity costs from one
country to another.
#3
5
4
People producing the things they do best is
possible because of
A
absolute advantage.
B
the production possibilities frontier.
C
specialization.
D
supply and demand.
#4
5
If Country A's opportunity cost for producing 1
pound of cashews is 5 pounds of coffee, and
Country B's opportunity cost is 1 pound of coffee,
which country has a comparative advantage in
cashew production?
A
Country A
B
Country B
C
the country that can produce the most cashews
D
the country that can produce the most coffee
#5
6
on a 1/2 sheet of paper answer the 2
questions from the start of class:
(you are not permitted to use any notes, etc while answering)
What is the relationship between a state
or nation’s exports and its specialization?
What is the assumption on which the
concept of comparative advantage is
based?
Feb 25­1:28 PM
use information from the WTO web site to find out
more about the organization's role in our global
economy
1. Where is the WTO located & when was
it established?
2. What are the functions of the WTO?
3. How many member countries are
there in all?
4. Describe 5 of the benefits mentioned
in the "10 Benefits of the WTO Trading
System."
WTO questions
7
located in Geneva, Switzerland
established January 1, 1995
WTO 1
may include: (1)administering WTO
trade agreements, (2)providing a forum
for trade negotiations, (3)handling trade
disputes, (4)monitoring national trade
policies, (5)providing technical
assistance & training for developing
countries, and (6)cooperating with
other international organizations
WTO 2
8
153
WTO 3
9
Attachments
EPP_p444.swf