ECON 1050 Chapter Notes - Chapter 7: North American Free Trade Agreement, Offshore Outsourcing, Demand Curve
5 Dec 2017
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Econ chapter 7 notes and terms global markets. The goods and services that we buy from other countries are our imports, and the goods and services that we sell to people in other countries are our exports: we trade both goods and services. In the textbook example, canada has a comparative advantage in the production of regional jets, and china has a comparative advantage in producing t-shirts. Canada will produce jets and import t-shirts from china, and china will produce t-shirts and import jets from canada. When this happens, both countries will gain from trade. Winners, losers, and the net gain from trade. We measure the gains and losses from imports by examining their effect on consumer surplus, producer surplus, and total surplus. In the importing country, the winners are those whose surplus increases and the losers are those whose surplus decreases: part of the gain in consumer surplus is a loss of producer surplus a redistribution of total surplus.
