Principles+of+Economics+7th+Edition+Mankiw-Solution+Manual Chapter 03

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1、Chapter3/InterdependenceandtheGainsfromTrade❖473INTERDEPENDENCEANDTHEGAINSFROMTRADEWHAT’SNEWINTHESEVENTHEDITION:ThereisanewInTheNewsfeatureon"EconomicswithinaMarriage."LEARNINGOBJECTIVES:Bytheendofthischapter,studentsshouldunderstand:Øhoweveryonecanbenefitwhenpeoplet

2、radewithoneanother.Øthemeaningofabsoluteadvantageandcomparativeadvantage.Øhowcomparativeadvantageexplainsthegainsfromtrade.Øhowtoapplythetheoryofcomparativeadvantagetoeverydaylifeandnationalpolicy.CONTEXTANDPURPOSE:Chapter3isthethirdchapterinthethree-chaptersectionth

3、atservesastheintroductionofthetext.Chapter1introducedtenfundamentalprinciplesofeconomics.Chapter2developedhoweconomistsapproachproblems.Thischaptershowshowpeopleandcountriesgainfromtrade(whichisoneofthetenprinciplesdiscussedinChapter1).ThepurposeofChapter3istodemonst

4、ratehoweveryonecangainfromtrade.Tradeallowspeopletospecializeintheproductionofgoodsforwhichtheyhaveacomparativeadvantageandthentradeforgoodsthatotherpeopleproduce.Becauseofspecialization,totaloutputrises,andthroughtradeweareallabletoshareinthebounty.Thisisastrueforco

5、untriesasitisforindividuals.Becauseeveryonecangainfromtrade,restrictionsontradetendtoreducewelfare.KEYPOINTS:·EachpersonconsumesgoodsandservicesproducedbymanyotherpeoplebothintheUnitedStatesandaroundtheworld.Interdependenceandtradearedesirablebecausetheyalloweveryone

6、toenjoyagreaterquantityandvarietyofgoodsandservices.©2012CengageLearning.AllRightsReserved.Maynotbescanned,copiedorduplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Chapter3/InterdependenceandtheGainsfromTrade❖47·Therearetwowaystocomparetheabilityoftwop

7、eopletoproduceagood.Thepersonwhocanproducethegoodwithasmallerquantityofinputsissaidtohaveanabsoluteadvantageinproducingthegood.Thepersonwhohasthesmalleropportunitycostofproducingthegoodissaidtohaveacomparativeadvantage.Thegainsfromtradearebasedoncomparativeadvantage,

8、notabsoluteadvantage.·Trademakeseveryonebetteroffbecauseitallowspeopletospecializeinthoseactivitiesinwhichtheyhaveacomparativeadvan