Reasons for Trade
Syllabus requirements:
Reasons for trade
• Differences in factor endowments
• Variety and quality of goods
• Gains from specialization
• Political
Higher level extension topic
• Absolute and comparative advantage (numerical and diagrammatic representations)
• opportunity cost
• limitations of the theory of comparative advantage
The first bullet points should be quite well understood by most students after a little research and careful thought.
This classic clip featuring Milton Friedman is often used as an argument for the free market, but I think it works particularly well as an argument for international (free) trade:
Power of the Market – The Pencil uploaded by LibertyPen
The Higher Level topics, particularly the concept of Comparative Advantage are trickier. However, the theory of comparative advantage is a vital argument in favour of international trade, and one well worth revising until you are confident that you understand it fully. Be sure to use diagrammatic explanations using PPFs, as well as numerical examples. Visit the following two related links in this order:
Economics Game: Ricardo, Coconuts and A Desert Island
Understanding Comparative Advantage
In addition, these excellent slideshows hosted on reffonomics.com will help you, particularly with the diagrams aspect.
| Print article | This entry was posted by James Penstone on September 18, 2011 at 8:57 pm, and is filed under Economics, IB Economics. Follow any responses to this post through RSS 2.0. You can leave a response or trackback from your own site. |
No comments yet.
No trackbacks yet.
Exchange Rates
about 11 years ago - No comments
Here are some resources useful for learning / revising the topic of exchange rates: 2) A useful slideshow from Reffonomics to explain why exchange rated fluctuate in a floating exchange rate system. 3) A Flash Card activity on some of the key words (if you click the arrow on the bottom right of each slide…
The Marshall Lerner Condition and the J Curve
about 13 years ago - No comments
1) A good web page, by http://welkerswikinomics.com: The Marshall-Lerner Condition, the J-curve, and the US trade deficit 2) A useful video via the same author’s http://www.econclassroom.com: 3) A chance for you to play around with the Marshall Lerner condition yourself: http://www.eco.rug.nl/~gigengack/ge/ML_Interactive/ML_Interactive.htm
Purchasing Power Parity
about 13 years ago - No comments
Purchasing Power Parity by Mindbitesdotcom. This is an incomplete taster / ad for a course you have to subscribe to, but is still useful as is stands, provided you add to your understanding with other resources. 15: PURCHASING POWER PARITY by InformedTrades: 2 Useful web sites: http://economics.about.com/cs/money/a/purchasingpower.htm http://www.wisegeek.com/what-is-purchasing-power-parity-theory.htm Questions: 1) What is PPP and explain…
The 2011 Eurozone Crisis
about 13 years ago - No comments
Image: Some rights reserved by Images_of_Money Here are some online resources to explore the so called Eurozone crisis that is occurring in late 2011: Is the Euro Crumbling? Excellent, simplified infographic video on background behind current Eurozone crisis by BBC. How can countries go bust? Useful one minute summary by the BBC’s Robert Preston. In…
World Trade Organisation (WTO)
about 13 years ago - No comments
The syllabus requirements: 4.4 World Trade Organization (WTO) • Aims • Success and failure viewed from different perspectives Accordingly, your goal from learning about this part of the syllabus should be to be able to answer the following questions: 1) What are the aims of the World Trade Organisation? 2) What are some of the…
Trading Blocs
about 13 years ago - No comments
IBO 2005-2012 Syllabus Requirements: Trading blocs • Free trade areas (FTAs) • Customs unions • Common markets Higher level extension topics • Trade creation and trade diversion Obstacles to achieving integration • reluctance to surrender political sovereignty • reluctance to surrender economic sovereignty Introduction to Trading Blocs Episode 38: Trade Blocs by mjmfoodie Perhaps a…
Tariffs, Quotas and Subsidies
about 13 years ago - No comments
These three types of protectionism have pretty tricky diagrams (or at least they can get tricky if we want to really get into how they work in terms of the impact they have on different groups or stakeholders. Note – we should want to get tricky if we want to do well at IB Economics…
Understanding the Balance of Payments
about 13 years ago - No comments
This can be a difficult concept to understand (especially at IGCSE level, less so at IB level), mainly because we are trying to understand how an entire country manages its financial accounts of all transactions between itself and other countries. The real difficulty, i find, is that different nations take different approaches which means that…
Understanding Comparative Advantage
about 14 years ago - No comments
Having played the desert island game, you should be in a position to develop your understanding of an important economic concept which is used to support international trade. 2 videos should help. The first is a rough-and-ready video with an easy to access example: Now, MJMFoodie gives an old but polished example, and introduces Adam…
Economics Game: Ricardo, Coconuts and A Desert Island
about 14 years ago - 1 comment
This is a good online game (you need Flash player in your browser) to learn about and develop your understanding of the concept of Comparative Advantage. Great for IB Economics students, and possibly handy for IGCSE level students too. Image: Some rights reserved by Dana Moos, Realtor Play the game here: http://desertislandgame.com/ Extra: By the…
