Mankiw video: Why Trading with Others Makes Good Sense
• Using resources made by other people
◦ Food, clothes, homes
• Even if you were the best sewer, farmer, and builder, you wouldn't keep all of those resources to yourself
◦ You share and trade and make money oﬀ of it
• David Ricardo
◦ Trade amongst nations and amongst individuals
• President of the U.S.
◦ Worlds fastest typer
‣ Should he type all of his own documents along with his other presidential duties? Or should he hire a typist/
secretary to do it for him?
• Hire a secretary
Chapter 3 - Interdependence and the Gains from Trade
• Interdependence is possibly because people trade with one another
• People provide goods and services to consumers because they get something in return
A Parable for the Modern Economy
• Ex. Rose produces meat, Frank produces potatoes
◦ Trade allows for greater variety
• Ex. If rose is good at producing meat and potatoes, should she still trade?
• Production possibilities
◦ The rate at which society could trade one good for the other depended on the amounts that were being produced
◦ PPF's are useful in showing t