IDSA01H3 Lecture 6: Trade and Development
15 Jan 2012
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Trade is called barter when it occurs b/w 2 ppl. (mr x exchanges a cow for mr ys horse) You specialize in a service/ trade, sell that skill to a person in need of you expertise for money. The basis of trade is specialization (one firm/country gets better at producing one good, and another firm/country gets better at producing something else, because you need skills, and you learn to get better by practice). Genetics and practice/training determine what you will specialize in. Economies of scale: lower cost on average if you as an individual/firm if you produce a lot of something than if you produce less. Increase productivity as size of production goes up (not the case with agriculture: big farms only exist because they are subsidized in some way or another. Nuance: you could have gotten it" for a better price. Imperfect information (you didn"t have full information of the product)
