ECON 2020U Chapter 3: Principles of Macro [Mankiw, Kneebone, McKenzie] - Chapter 3 Notes
Document Summary
Trade allows, amongst monetary benefits, for consumers to enjoy a larger var iety of products produced in varying environments around the world. More importantly than diversity, trade allows local markets to specialize in a good or service to sell it to another local market at a lower cost than it ma y be produced in their environment. Production possibilities frontiers, as examined in chapter 1, outline precis ely what quantity of varying goods or services can be produced in a given time. Consumption possibilities frontiers are the same, assuming the worker/instit ution is self-sufficient and only so. Without working any extra hours, institutions can usually specialize to prov ide a higher quality and a larger quantity of goods and services if they do not spend time and resources making a variety of goods. This generally leads to many different local markets specializing to produce goods and trading them to other local markets specializing in other goods.
