Topic 5: Gains from trade
Lesson Objectives
- Understand the terms of trade.
- Analyze how specialization and trade can increase consumption for both all trading partners.
- Understand the difference between absolute advantage and comparative advantage.
- Learn to identify those who benefit and those who become worse off with free trade.
- Analyze the impact of trade restrictions on jobs.
Textbook reading
- Chapter 3
Non-textbook materials
- This article gives some good illustrations of the effects of trade restrictions.
- This article on what happened to Argentina when it imposed trade restrictions.
- Watch Khan on comparative advantage and trade (8:55)
- Is nothing the best response to China’s theft of intellectual property? This podcast from Planet Money says “Yes.”
- A podcast from Planet Money on the WTO. Can’t live with it, hard to crush your trade opponents without it.
Videos
Trade Can Benefit Both Trading Partners
Comparative and Absolute Advantage
Free Trade and the Political Process