CHAPTER Interdependence and the Gains from Trade - Deer Valley Unified ...
Wojciech Gerson (1831-1901)
Seventh Edition
EcProincniploes mof ics
N. Gregory Mankiw
CHAPTER Interdependence and
3 the Gains from Trade
? 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
In this chapter, look for the answers to these questions
? Why do people--and nations--choose to be
economically interdependent?
? How can trade make everyone better off? ? What is absolute advantage?
What is comparative advantage? How are these concepts similar? How are they different?
? 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Interdependence
Every day
hair gel from
you rely on Cleveland, OH
many people
from around
cell phone
the world,
from Taiwan
most of whom you've never met,
to provide you
dress shirt from China
with the goods
and services
coffee from
you enjoy.
Kenya
?Phil Date/
Interdependence
One of the Ten Principles from Chapter 1: Trade can make everyone better off.
We now learn why people--and nations-- choose to be interdependent, and how they can gain from trade.
3
? 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Our Example
Two countries: the U.S. and Japan Two goods: computers and wheat One resource: labor, measured in hours We will look at how much of both goods
each country produces and consumes if the country chooses to be self-sufficient if it trades with the other country
4
? 2015 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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