ECON 110 Chapter Notes - Chapter 33: Absolute Advantage, Opportunity Cost, Open Economy

• School: Queen's University
• Department: Economics
• Course: ECON 110
• Professor: Ian James Cromb

Document Summary

Chapter 33: the gains from international trade part one. Open economy: an economy that engages in international trade. Closed economy: an economy that has no foreign trade. Without trade, each person would have to be self-sufficient. Would have extremely low standards of living as people are not good at doing everything. Trade allows for people to specialize in what they do well in: buy/trade for the other things they cannot produce. Without trade, each region would have to be self-sufficient. Trade allows for regions to specialize in producing things in which it has a natural adv: cool regions wheat, hot regions bananas, sugarcane, coffee beans, etc, mountain regions mining and forestry products. Living standards of the regions would be higher with trade. Like regions & individuals, countries also gain from specialization and international trade. Produce the goods that you"re best at more efficient & use less resources. Buy/trade for the other things they do not produce.