in class – week 2 gains from exchange why do people willingly trade?
TRANSCRIPT
In Class – Week 2
Gains from ExchangeWhy do people willingly trade?
Comparative Advantage and Trade
Learning Objective 2.2
Trade The act of buying or selling.
Specialization and Gains from Trade
FIGURE 2-4
Production Possibilities for You and Your Neighbor, without Trade
How does this work?
• Two people in this market– You and Your Neighbor
• Two goods being produced– Apples and Cherries
• See if you can do better by specializing– That is, what has the least opportunity costs for
each of you to produce• What will be the market price for exchange?