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Lesson Title: Recognizing International Trade Definitions and Concepts TEKS: 119.12c.5A Objectives: TSWBAT (The student will be able to…..) Define terms important in discussing international trade given written questions with no errors. Differentiate between exports and imports given written questions with no errors. Explain the difference between comparative advantage and absolute advantage given written questions with no errors. Identify potential gains from international trade of agricultural products given written questions with no errors. Teaching Materials and Resources: Power Point Presentation --- tradedef.ppt World Map Agricultural Commodity Symbols --- symbols.html Quiz --- defquiz.html Teaching Procedures: Interest Approach/Motivator Show the following statements as part of the power point presentation: U.S. trade with Mexico and Canada is up as a result of NAFTA. Agriculture accounts for 7% of Malaysia’s GDP. Per capita consumption of rice in Indonesia is 1,600 pounds per year. Exports to China were down in 1999 due to lasting impacts of the Asian economic crisis. France has declared a ban on imports of beef products from Argentina due to recent FMD outbreaks. Ask students if they would understand what was being said if they were to read these comments in a newspaper article. Explain that these terms are important in understanding international agricultural trade, this week’s unit. Today We Will… • Define terms important in discussing international trade • Differentiate between exports and imports • Explain the difference between comparative advantage and absolute advantage • Identify potential gains from international trade of agricultural products Presentation Use power point presentation to keep main points visible to students at all times and supplement discussion and lecture. Define and explain the following terms: Trade - an exchange of products Why would we want to be involved in trade? It allows you to buy goods unavailable locally Such as products that aren’t in season in your area or products that can’t be grown in your area due to climate Export - a good transported away from the area Import - a good transported into the area Domestic - relating to one’s own country Commodity - an economic good produced by agricultural or mining industries Most commonly refers to products marketed in bulk or raw products What would be some examples? GDP - Gross Domestic Product - total value of a nation’s annual output of goods and services Per capita - per person Comparative Advantage -a nation will specialize in the production and export of goods that they can produce cheaper than other countries due to their favorable conditions or available resource What are some things that may determine whether or not a country has comparative advantage for a certain product? Soil conditions, climate, government regulation, labor, mechanization, etc. Countries, states, or areas, will raise the crop that provides the most profit given their available resources Other countries abandoning less profitable enterprises also contributes to comparative advantage and a lower price of all goods. For example, Austria and Hungary both produce sugar beets and potatoes. Locate both countries on the map and be sure to place the commodity symbols on that country Austria can produce sugar beets for $0.50 per pound and potatoes for $0.30 per pound. Hungary can produce sugar beets for $0.45 per pound and potatoes for $0.15 per pound. Hungary will decide to specialize in the production of potatoes because that is the product they stand to profit most from, given their available resources. Therefore, Austria will be able to specialize in the production of sugar beets. As a result of this specialization, Austria will import potatoes from Hungary for $0.25 per pound and Hungary will import sugar beets from Austria for $0.35 per pound. Everyone will benefit. Absolute Advantage - a nation will export goods certain goods because it can produce it cheaper than all other nations or other nations are unable to produce it Ask students what they think could be possible benefits or gains from trade. Share the following gains from trade and explain how these things benefit countries involved in trade. Specialization in Goods of Efficient Production --- a country can do a better job of producing what it can produce efficiently and not waste time and money producing something that someone can produce more efficiently Gain from Exchange of Goods --- exporting products will provide revenue for the country and it can save money by importing less costly goods of another country for a product which it doesn’t produce effectively High Quality Goods --- the product of a country that specializes in that commodity will be highest Diversity of Selection --- allows countries to expand their diet by adding foods that they are unable to produce in their area Higher Export Prices --- if another country isn’t producing your commodity, you’ll be able to sell it for a higher price in that country Lower Import Prices --- because that country is producing the commodity more efficiently than you, you’ll be able to import it for less than you could produce it Increases Standard of Living --- increased revenues and enables a more diverse diet Application Show the statements from the beginning of the lecture again and have the students rewrite them in their own words to reflect the new terms that they’ve learned. Evaluation Have students complete the on-line quiz (defquiz.html) and submit it to the teacher via email. References: Agriscience 101 Supplement by TAMU IMS TAMU AGEC 452 Supplement by Dr. Parr Rosson CIA World Factbook (on-line)