ECO100Y5 Chapter 16: Chapter 16 (Why International Trade) - ECO100 Zachary Mahone

• School: UTM
• Department: Economics
• Course: ECO100Y5
• Professor: Zachary Mahone

Document Summary

Advantages/disadvantages of trade, absolute/comparative advantage, tariffs & quotas. Trade occurs between rational people because everyone benefits. Trade enables parties to obtain products they can"t produce themselves, either because they don"t possess resources or because they can"t produce efficiently. Specialization & trade allow us to produce more with the same resources & the average real standard of living is greater as a result. Trade among individuals & businesses is almost always carried on because the parties believe they will be better off. This means both parties are better off, or the trade wouldn"t happen. Trade is not a zero-sum game, where one person must lose for another to gain. Specialization takes place when an individual, business, or country focuses on the production of a limited number of products to make efficient use of resources. By learning to do something well & specializing in it, most of us spend much of our time in that activity.