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19: International Trade

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    181251

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    • 19.0: Introduction
      This page explores international trade using the iPhone as a case study, highlighting global cooperation among competitors like Samsung. It defines absolute and comparative advantage, stressing the importance of companies specializing in their strengths.
    • 19.1: Absolute and Comparative Advantage
      This page discusses absolute and comparative advantage in international trade, emphasizing its benefits for economic growth and specialization. It references historical economists like David Ricardo and uses examples from Saudi Arabia and the U.S. to demonstrate how countries can benefit by focusing on products with lower opportunity costs.
    • 19.2: What Happens When a Country Has an Absolute Advantage in All Goods
      This page explores the concept of comparative advantage in international trade, highlighting how countries, despite having absolute advantages, can benefit from specializing in goods they produce more efficiently. By using examples from the U.S., Mexico, Canada, and Venezuela, it illustrates how trade allows countries to exploit lower opportunity costs, leading to increased overall output.
    • 19.3: Intra-industry Trade between Similar Economies
      This page discusses the benefits of intra-industry trade between similar economies, noting that 60% of U.S. and European trade falls into this category. It highlights how such trade facilitates specialization, innovation, and cost reductions, enhancing product variety and consumer choice.
    • 19.4: The Benefits of Reducing Barriers to International Trade
      This page discusses tariffs as trade barriers and the WTO's efforts to reduce them through negotiations like the Doha Round. While reducing trade barriers can yield significant economic benefits, especially for low-income nations, these advantages are often overlooked.
    • 19.5: Key Terms
      This page defines key economic concepts including absolute advantage, gain from trade, intra-industry trade, splitting up the value chain, tariffs, and value chain. Absolute advantage pertains to production efficiency, while gain from trade emphasizes benefits derived from trade. Intra-industry trade refers to exchanging goods within a single industry. Splitting up the value chain addresses the geographical stages of production.
    • 19.6: Key Concepts and Summary
      This page explains absolute and comparative advantages in international trade, emphasizing the benefits of specialization for countries, even those with absolute advantages. It discusses intra-industry trade among similar economies, highlighting the gains from specialized tasks and economies of scale. The text also addresses tariffs and the WTO's role in reducing trade barriers to maximize international trade benefits.
    • 19.7: Self-Check Questions
      This page examines key economic concepts like comparative and absolute advantage, opportunity costs, and economies of scale through questions and scenarios involving the production capacities of various countries. It highlights the economic benefits nations can gain from both importing and exporting similar goods and questions the persistence of trade restrictions despite the advantages of free trade. The discussion emphasizes fundamental principles of international economics.
    • 19.8: Review Questions
      This page explores economic concepts such as absolute and comparative advantage, conditions for trade gains, and historical trade factors from the 1800s. It also examines intra-industry trade, economic benefits, the value chain's division, and the effects of international trade on countries of varying sizes.
    • 19.9: Critical Thinking Questions
      This page poses questions about trade advantages, geography's impact, and specific country strengths in products like coffee. It covers opportunity costs in sweater and wine production and discusses intra-industry trade. Misconceptions about poor countries' advantages and the trade dynamics of low-income nations are examined, along with how comparative advantage evolves over time. The content also explores collaborative issues and the benefits consumers derive from trade.
    • 19.10: Problems
      This page covers the concept of comparative and absolute advantages in production for various countries and goods, including France and Tunisia for green beans and tomatoes, Japan and Malaysia for rubber and radios, and Canada and Venezuela for oil and lumber. It explores opportunity costs, trade impacts, and technological changes in intra-industry trade. The page also assesses the global effects of a 1% increase in world GDP over ten years, juxtaposing it with Sri Lanka's GDP.

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