ECN 104 Chapter 3: Chapter 3 - Interdependence & the Gains from Trade
10 Feb 2012
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Every day you rely on many people from around the world, most of whom you ve never met, to provide you with the goods and services you enjoy. one of the ten principles from chapter 1: we now learn why people and nations choose to be interdependent, and how they can gain from trade. we will look at how much of both goods each country produces and consumes if the country chooses to be self-sufficient if it trades with the other country. canadian consumers get 250 computers and 2500 tons wheat. Japanese consumers get 120 computers and 600 tons wheat. we will compare consumption without trade to consumption with trade. first, we need to see how much of each good is produced and traded by the two countries. Two measures of the cost of a good. two countries can gain from trade when each specializes in the good it produces at lowest cost.
