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How does Trade

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by

Stacy Shirey

on 9 August 2014

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Transcript of How does Trade

What can I do for other people?
How can other people help me?
You will participate in several rounds of producing and trading in order to acquire a certain number of pineapples and potatoes.
In this activity, you will assume the role of farmers who produce potatoes and pineapples.
Old MacDonald had a farm...
Thinking Like an Economist
create a flowchart, like the one below, to show the effects of specialization on the economy. This flowchart has been started for you:
How Does Specialization Lead to Economic Independence
How does Trade
Make People Better Off?
Sarah and Joe can both produce kites and toy trains. The table shows the number of kites and trains they can each produce in one hour.
use this table to answer the corresponding questions.
How Do People and Nations Gain from Specialization and Trade?
How Does Trade Make Us Wealthier?

a. In the center of a page, in an oval, write, Trade
makes us wealthier by . . .
b. Attach three spokes to the center oval, one for
each of these statements:
• moving goods to those who value them
• increasing the quantity and variety of goods
• lowering the costs of goods
c. As you read the section, add three spokes to
each statement with these things:
• a simple illustration
• an explanation of the statement in your own
words
• two examples of how it makes us wealthier
1. What is the relationship between division of labor and the development of technical expertise?

2. According to the author, why will you earn more money if you choose an occupation for which you have a comparative advantage?

3. How might you go about finding the careers in which you might have a comparative advantage?


The Power to Choose
In this lesson, you will examine how individuals benefit when they specialize in producing goods for which they hold a lower opportunity cost and trade for goods for which they do not.
Think of a time when you have been asked to do a task for someone else.
have you ever needed help doing something?
who did you ask? Why?
what did you have to give them
in return?
Did they have to give something up to help you?
Were you better at it, or have more experience?
What did you give up by helping them?
Did you get anything by helping them?
Would you trade your experience or
talents for someone else's
You will receive a quota,
supply of goods and an
envelope.
Based on your goal, determine what you want to produce by choosing one production option from your production schedule.
Remove the corresponding numbers of potato and pineapple tokens from your envelope.
When you hear that the marketplace is open, find a farmer from the other region to trade with.
This will be the farmer you trade with in all rounds. But you cannot tell the farmer what your trade goal is!
You can trade only whole tokens.
Complete the row for Round 1 in the Farmer’s Ledger of your student handout.
When you have finished recording your amounts for the round, return the tokens you traded.
It's A New
Year!
Remove the corresponding tokens.
Examine your goal and choose an option in your production schedule.
Conduct a trade at the marketplace.
Complete the row for Round 2 in your ledger. Then return the tokens you traded.
Another Year
Has Passed
Remove the corresponding tokens.
Examine your goal and choose an option in your production schedule.
Conduct a trade at the marketplace.
Complete the row for Round 3 in your ledger. Then return the tokens you traded.
During this round, you may choose to reveal your trade goals to the other farmer.
Yet another
Year!
Remove the corresponding tokens.
Examine your goal and choose an option in your production schedule.
Conduct a trade at the marketplace.
Complete the row for Round 4 in your ledger. Then return the tokens you traded.
Farmers will now participate in a Farmers Regional Meeting.
Farmers A: Get together and share strategies for how to meet your goal.
Farmers B: Get together and share strategies for how to meet your goal.
It's A New
Year!
Remove the corresponding tokens.
Examine your goal and choose an option in your production schedule.
Conduct a trade at the marketplace.
Complete the row for Round 5 in your ledger. Then return the tokens you traded.
How did it feel to be a farmer in Region A? In Region B?
Did one group of farmers benefit more from specializing and trading? Why or why not?
How were you able to meet your goal?
Use these terms in speaking and writing assignments
specialization
division of labor
voluntary exchange
barter
money
economic interdependence
absolute advantage
compariable advantage
2pt
2pt
3pt
1pt
1pt
4pt
3pt
3pt
a. Who has an absolute advantage in the
production of both kites and toy trains? How
can you tell?
b. Who has a comparative advantage in producing
kites? Why?
c. Who has a comparative advantage in producing
toy trains? Why?
Create a spoke diagram showing how trade makes us wealthier.
The flowchart shows how Farmer A and Farmer B were both able to achieve their goal amounts of pineapples and potatoes.
On the back of the handout, list the skills and attributes you feel might give you a comparative advantage when seeking a job.
Full transcript