Sunday, September 9, 2012

Reflections of Chapter 3: Interdependence and the Gains From Trade

1. It surprised me that one person (or country) can be the best at producing a good or goods (by best I mean using fewer inputs to produce than another country -having the absolute advantage) but still benefit by letting another country produce that good, because the other country has the comparative advantage.

2. I believe that international trade is a good thing. If it weren't for international trade, we wouldn't be able to enjoy the variety of goods we have access to now. Much of the produce in the grocery store, for instance, comes from other countries that have different climates and seasons than the US. We couldn't grow some of it no matter what. Some of the items that we could grow in our country would be much more expensive if we supplied them. Since other countries can grow them at a lower opportunity cost, they charge less for them. Some people may complain about the loss of jobs when they get outsourced to foreign countries, but they take for granted all the luxuries provided to them as a result of international trade. You can't have one without the other. As the book says, we're all better off as a result of trade, whether we know it or not.

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