ECO100Y5 Lecture Notes - Mercantilism, Absolute Advantage, Comparative Advantage
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ECO100Y5 Full Course Notes
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Document Summary
Historically, trade typically first occurred between communities rather than within communities where leaders of the family or the community usually determined the allocation of goods and services. Trade first occurs between polynesian islands, rather than within islands, and between native americans tribes, rather than within tribes, for example. In fact, the first capitalists were merchants who moved commodities from one place to another but did not initially change the existing individual and small-scale production of european farmers and craftsmen. This development of european merchants generated the theory of mercantilism, the first integrated economic system, from the 16th to the 18th centuries. Mercantilism is most easily understood as the articulation of the merchant viewpoint, viewing profit as a consequence of exchange (circulation) by buying cheap and selling dear", rather than due to anything in production. There is no such thing as profit for a country as a whole, as a consequence, since someone"s gain in another"s loss.
