In 2-3 paragraphs, respond to the following. Your initial post should be substantive and be supported by course concepts. Your initial post is due by Wednesday to allow other students to respond.
Your choice! Make an argument for globalization or for protectionism.
https://youtu.be/ol4NexZ0iII
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19.2 What Happens When a Country Has an Absolute Advantage in All Goods - Principles of Microeconomics 2e | OpenStax Skip to Content Principles of Microeconomics 2e19.2 What Happens When a Country Has an Absolute Advantage in All Goods Principles of Microeconomics 2e19.2 What Happens When a Country Has an Absolute Advantage in All Goods Table of contents My highlightsPrint Table of contents Preface 1 Welcome to Economics! Introduction 1.1 What Is Economics, and Why Is It Important? 1.2 Microeconomics and Macroeconomics 1.3 How Economists Use Theories and Models to Understand Economic Issues 1.4 How To Organize Economies: An Overview of Economic Systems Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions 2 Choice in a World of Scarcity Introduction to Choice in a World of Scarcity 2.1 How Individuals Make Choices Based on Their Budget Constraint 2.2 The Production Possibilities Frontier and Social Choices 2.3 Confronting Objections to the Economic Approach Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 3 Demand and Supply Introduction to Demand and Supply 3.1 Demand, Supply, and Equilibrium in Markets for Goods and Services 3.2 Shifts in Demand and Supply for Goods and Services 3.3 Changes in Equilibrium Price and Quantity: The Four-Step Process 3.4 Price Ceilings and Price Floors 3.5 Demand, Supply, and Efficiency Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 4 Labor and Financial Markets Introduction to Labor and Financial Markets 4.1 Demand and Supply at Work in Labor Markets 4.2 Demand and Supply in Financial Markets 4.3 The Market System as an Efficient Mechanism for Information Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 5 Elasticity Introduction to Elasticity 5.1 Price Elasticity of Demand and Price Elasticity of Supply 5.2 Polar Cases of Elasticity and Constant Elasticity 5.3 Elasticity and Pricing 5.4 Elasticity in Areas Other Than Price Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 6 Consumer Choices Introduction to Consumer Choices 6.1 Consumption Choices 6.2 How Changes in Income and Prices Affect Consumption Choices 6.3 Behavioral Economics: An Alternative Framework for Consumer Choice Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 7 Production, Costs, and Industry Structure Introduction to Production, Costs, and Industry Structure 7.1 Explicit and Implicit Costs, and Accounting and Economic Profit 7.2 Production in the Short Run 7.3 Costs in the Short Run 7.4 Production in the Long Run 7.5 Costs in the Long Run Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 8 Perfect Competition Introduction to Perfect Competition 8.1 Perfect Competition and Why It Matters 8.2 How Perfectly Competitive Firms Make Output Decisions 8.3 Entry and Exit Decisions in the Long Run 8.4 Efficiency in Perfectly Competitive Markets Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 9 Monopoly Introduction to a Monopoly 9.1 How Monopolies Form: Barriers to Entry 9.2 How a Profit-Maximizing Monopoly Chooses Output and Price Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 10 Monopolistic Competition and Oligopoly Introduction to Monopolistic Competition and Oligopoly 10.1 Monopolistic Competition 10.2 Oligopoly Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 11 Monopoly and Antitrust Policy Introduction to Monopoly and Antitrust Policy 11.1 Corporate Mergers 11.2 Regulating Anticompetitive Behavior 11.3 Regulating Natural Monopolies 11.4 The Great Deregulation Experiment Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 12 Environmental Protection and Negative Externalities Introduction to Environmental Protection and Negative Externalities 12.1 The Economics of Pollution 12.2 Command-and-Control Regulation 12.3 Market-Oriented Environmental Tools 12.4 The Benefits and Costs of U.S. Environmental Laws 12.5 International Environmental Issues 12.6 The Tradeoff between Economic Output and Environmental Protection Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 13 Positive Externalities and Public Goods Introduction to Positive Externalities and Public Goods 13.1 Why the Private Sector Underinvests in Innovation 13.2 How Governments Can Encourage Innovation 13.3 Public Goods Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 14 Labor Markets and Income Introduction to Labor Markets and Income 14.1 The Theory of Labor Markets 14.2 Wages and Employment in an Imperfectly Competitive Labor Market 14.3 Market Power on the Supply Side of Labor Markets: Unions 14.4 Bilateral Monopoly 14.5 Employment Discrimination 14.6 Immigration Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions 15 Poverty and Economic Inequality Introduction to Poverty and Economic Inequality 15.1 Drawing the Poverty Line 15.2 The Poverty Trap 15.3 The Safety Net 15.4 Income Inequality: Measurement and Causes 15.5 Government Policies to Reduce Income Inequality Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 16 Information, Risk, and Insurance Introduction to Information, Risk, and Insurance 16.1 The Problem of Imperfect Information and Asymmetric Information 16.2 Insurance and Imperfect Information Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 17 Financial Markets Introduction to Financial Markets 17.1 How Businesses Raise Financial Capital 17.2 How Households Supply Financial Capital 17.3 How to Accumulate Personal Wealth Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 18 Public Economy Introduction to Public Economy 18.1 Voter Participation and Costs of Elections 18.2 Special Interest Politics 18.3 Flaws in the Democratic System of Government Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 19 International Trade Introduction to International Trade 19.1 Absolute and Comparative Advantage 19.2 What Happens When a Country Has an Absolute Advantage in All Goods 19.3 Intra-industry Trade between Similar Economies 19.4 The Benefits of Reducing Barriers to International Trade Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems 20 Globalization and Protectionism Introduction to Globalization and Protectionism 20.1 Protectionism: An Indirect Subsidy from Consumers to Producers 20.2 International Trade and Its Effects on Jobs, Wages, and Working Conditions 20.3 Arguments in Support of Restricting Imports 20.4 How Governments Enact Trade Policy: Globally, Regionally, and Nationally 20.5 The Tradeoffs of Trade Policy Key Terms Key Concepts and Summary Self-Check Questions Review Questions Critical Thinking Questions Problems A | The Use of Mathematics in Principles of Economics B | Indifference Curves C | Present Discounted Value Answer Key Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Chapter 8 Chapter 9 Chapter 10 Chapter 11 Chapter 12 Chapter 13 Chapter 14 Chapter 15 Chapter 16 Chapter 17 Chapter 18 Chapter 19 Chapter 20 References Index By the end of this section, you will be able to: Show the relationship between production costs and comparative advantage Identify situations of mutually beneficial trade Identify trade benefits by considering opportunity costs What happens to the possibilities for trade if one country has an absolute advantage in everything? This is typical for high-income countries that often have well-educated workers, technologically advanced equipment, and the most up-to-date production processes. These high-income countries can produce all products with fewer resources than a low-income country. If the high-income country is more productive across the board, will there still be gains from trade? Good students of Ricardo understand that trade is about mutually beneficial exchange. Even when one country has an absolute advantage in all products, trade can still benefit both sides. This is because gains from trade come from specializing in one’s comparative advantage. Production Possibilities and Comparative Advantage Consider the example of trade between the United States and Mexico described in Table 19.7. In this example, it takes four U.S. workers to produce 1,000 pairs of shoes, but it takes five Mexican workers to do so. It takes one U.S. worker to produce 1,000 refrigerators, but it takes four Mexican workers to do so. The United States has an absolute advantage in productivity with regard to both shoes and refrigerators; that is, it takes fewer workers in the United States than in Mexico to produce both a given number of shoes and a given number of refrigerators. CountryNumber of Workers needed to produce 1,000 units — ShoesNumber of Workers needed to produce 1,000 units — Refrigerators United States4 workers1 worker Mexico5 workers4 workers Table 19.7 Resources Needed to Produce Shoes and Refrigerators Absolute advantage simply compares the productivity of a worker between countries. It answers the question, “How many inputs do I need to produce shoes in Mexico?” Comparative advantage asks this same question slightly differently. Instead of comparing how many workers it takes to produce a good, it asks, “How much am I giving up to produce this good in this country?” Another way of looking at this is that comparative advantage identifies the good for which the producer’s absolute advantage is relatively larger, or where the producer’s absolute productivity disadvantage is relatively smaller. The United States can produce 1,000 shoes with four-fifths as many workers as Mexico (four versus five), but it can produce 1,000 refrigerators with only one-quarter as many workers (one versus four). So, the comparative advantage of the United States, where its absolute productivity advantage is relatively greatest, lies with refrigerators, and Mexico’s comparative advantage, where its absolute productivity disadvantage is least, is in the production of shoes. Mutually Beneficial Trade with Comparative Advantage When nations increase production in their area of comparative advantage and trade with each other, both countries can benefit. Again, the production possibility frontier is a useful tool to visualize this benefit. Consider a situation where the United States and Mexico each have 40 workers. For example, as Table 19.8 shows, if the United States divides its labor so that 40 workers are making shoes, then, since it takes four workers in the United States to make 1,000 shoes, a total of 10,000 shoes will be produced. (If four workers can make 1,000 shoes, then 40 workers will make 10,000 shoes). If the 40 workers in the United States are making refrigerators, and each worker can produce 1,000 refrigerators, then a total of 40,000 refrigerators will be produced. CountryShoe Production — using 40 workers Refrigerator Production — using 40 workers United States10,000 shoesor40,000 refrigerators Mexico8,000 shoesor10,000 refrigerators Table 19.8 Production Possibilities before Trade with Complete Specialization As always, the slope of the production possibility frontier for each country is the opportunity cost of one refrigerator in terms of foregone shoe production–when labor is transferred from producing the latter to producing the former (see Figure 19.4). Figure 19.4 Production Possibility Frontiers (a) With 40 workers, the United States can produce either 10,000 shoes and zero refrigerators or 40,000 refrigerators and zero shoes. (b) With 40 workers, Mexico can produce a maximum of 8,000 shoes and zero refrigerators, or 10,000 refrigerators and zero shoes. All other points on the production possibility