Why Countries Trade
Chapter Outline
I. Introduction
II. International Trade Versus Interregional Trade
international trade occurs for the same reasons as interregional trade
gains from technology and gains from trade
III. Trade in an Individual Product
trade in cloth (U.S./India) — Figure 2.1
supply and demand
the effects on India and the U.S.
IV. Trade Based on Absolute Advantage A. Absolute Advantage
PASSPORT: Football Games, Rats, and Economic Theory
PASSPORT: Mercantilism
Table 2.1
B. The Gains from Specialization and Trade with Absolute Advantage
gains from trade — Table 2.2
the labor theory of value
V. Trade Based on Comparative Advantage
A. Comparative Advantage
Table 2.3
David Ricardo
Babe Ruth
B. The Gains from Specialization and Trade with Comparative Advantage
PASSPORT: Principal Exports of Selected Countries — Table 2.4
Change in world output — Table 2.5
VI. Trade Based on Opportunity Costs
A. Opportunity Costs
PASSPORT: Labor Costs as a Source of Comparative Advantage — Table 2.6
B. The Gains from Specialization and Trade with Opportunity Costs
Table 2.7
Autarky
VII. The Production Possibilities Frontier and Constant Costs
A. The Production Possibilities Frontier — Table 2.8
B. Production and Consumption Without Specialization and Trade — Figure 2.2
C. Production and Consumption with Specialization and Trade — Figure 2.3
VIII. The Terms of Trade A. Changes in the Gains from Specialization and Trade Table 2.9 Figure 2.4
B. Demand Conditions and the Terms of Trade C. Distribution of the Gains from Trade
PASSPORT: The Commodity Terms of Trade
Table 2.10
IX. Trade Under Increasing Opportunity Costs
A. Increasing Costs and the Production Possibilities Frontier — Figure 2.6
B. Production and Consumption without Specialization and Trade — Figure 2.7
C. Production and Consumption with Specialization and Trade — Figure 2.8
X. Dynamic Gains from Trade
I. Introduction
II. International Trade Versus Interregional Trade
international trade occurs for the same reasons as interregional trade
gains from technology and gains from trade
III. Trade in an Individual Product
trade in cloth (U.S./India) — Figure 2.1
supply and demand
the effects on India and the U.S.
IV. Trade Based on Absolute Advantage A. Absolute Advantage
PASSPORT: Football Games, Rats, and Economic Theory
PASSPORT: Mercantilism
Table 2.1
B. The Gains from Specialization and Trade with Absolute Advantage
gains from trade — Table 2.2
the labor theory of value
V. Trade Based on Comparative Advantage
A. Comparative Advantage
Table 2.3
David Ricardo
Babe Ruth
B. The Gains from Specialization and Trade with Comparative Advantage
PASSPORT: Principal Exports of Selected Countries — Table 2.4
Change in world output — Table 2.5
VI. Trade Based on Opportunity Costs
A. Opportunity Costs
PASSPORT: Labor Costs as a Source of Comparative Advantage — Table 2.6
B. The Gains from Specialization and Trade with Opportunity Costs
Table 2.7
Autarky
VII. The Production Possibilities Frontier and Constant Costs
A. The Production Possibilities Frontier — Table 2.8
B. Production and Consumption Without Specialization and Trade — Figure 2.2
C. Production and Consumption with Specialization and Trade — Figure 2.3
VIII. The Terms of Trade A. Changes in the Gains from Specialization and Trade Table 2.9 Figure 2.4
B. Demand Conditions and the Terms of Trade C. Distribution of the Gains from Trade
PASSPORT: The Commodity Terms of Trade
Table 2.10
IX. Trade Under Increasing Opportunity Costs
A. Increasing Costs and the Production Possibilities Frontier — Figure 2.6
B. Production and Consumption without Specialization and Trade — Figure 2.7
C. Production and Consumption with Specialization and Trade — Figure 2.8
X. Dynamic Gains from Trade