ECN 101 Lecture Notes - Lecture 14: Robusta Coffee, Coffee Bean, Sports Equipment

• School: Ryerson University
• Department: Economics
• Course: ECN 101
• Professor: Thomas Barbiero

Document Summary

Simple answer: they trade because it is beneficial. The benefits that emerge relate to three underlying facts: the distribution of natural, human, and capital resources among nations is uneven; nations differ in their endowments of economic resources. Some nations have oil, some do not. Example: there are areas that specialize in certain type coffees: africa produces primarily the robusta coffee bean; south america the arabica coffee bean, and trade between each other. Nations with an abundance of labour (therefore relatively inexpensive), oth skilled and unskilled, produce goods that require a lot of labour, like cameras etc. China is an example of country with lots of labour. E. g. , textiles, electronics, apparel, toys, and sporting goods. Australia and canada are examples of economies with lots of land: capital-intensive goods. Airplanes, automobiles, agricultural equipment, machinery, and chemicals. A country is said to have an absolute advantage over other producers for a product if it is the most efficient producer of that product.