Download International Trade-phinizy

Warm-Up:
Write the words that match the
clues
1. This is used to measure inflation
2. This comes after the “peak”
3. The most attractive alternative given up
when a choice is made
International Economics
SSEIN1
The student will explain why individuals, businesses and governments
trade goods and services.
SSEIN1.a
Define and distinguish between absolute advantage and comparative
advantage.
SSEIN1.b
Explain that most trade takes place because of comparative advantage
in the production of a good or service.
SSEIN1.c
Explain the difference between balance of trade and balance of
payments.
Then read pp.86-87 and add
these words to your notes
1.
2.
3.
4.
Absolute advantage
Comparative advantage
Deficit
Surplus
International Trade
Is it possible for countries to
benefit from international
trade?
What are the costs and
benefits?
International Trade
Absolute Advantage
-the ability to produce
more of a product than
some other producer.
International Trade
Comparative Advantage
-the ability to produce a
product at a lower
opportunity cost (cheaper)
than some other producer.
Fritolaysia and Snackistan
Chips
Dip
Fritolaysia
80
100
Snackistan
70
50
Fritolaysia
Snackistan
150
150
International Trade
• What if one country has the absolute
advantage in all products? Will the
country be able to gain from trade with
others?
Read more about
absolute and
comparative advantage
http://www.econlib.org/library/Topi
cs/Details/comparativeadvantage.
html
“International Trade”
What are the advantages
of trade?
• Cheaper products
• More customers
• More product variety
“International Trade”
What are the disadvantages of
trade?
- Dependence on other
countries
- Labor issues
- Hurt domestic businesses
Trade Barriers
Trade Barriers
Use pp. 90-91 (EOCT) pp 449
(textbook) to complete the chart
Type of Trade
Barrier
Tariff
Quota
Standards
Subsidies
Embargo
Definition
Picture or
example
Trade Barriers
1. The U.S. government
continues to make trade with
Cuba illegal.
Trade Barriers
2. Congress passes a law
requiring all foreign-grown
vegetables sold in the U.S. be
organically grown.
Trade Barriers
3. The U.S. government pays
farmers 20 cents for each
pound of cotton they produce.
Trade Barriers
4. Lawmakers in Washington D.C. limit
the number of cars Japan can sell in
the U.S.
Trade Barriers
5. A tax is placed on imported
sugar.
Wrap-up:
1. Why do countries trade with each
other?
2. What is the difference between
absolute and comparative
advantage?