Trade Lesson 2 Activities
Global Trade Lesson 2 Introduction: What can you do best

Time: 10 minutes
Skills: Holistic Thinking
Objective 2
Related Resources: n/a

Scenario. The students join habitat for humanity. Ask the students what he or she might want to contribute to the project. Who has the best skills for each task involved in building a home?

Does it make sense for all the students to do each task together or does it makes sense for each to break off in small groups and do the task where they have the most skill?

*Note do not lead them to answer the above question yeah/neah. Let the students come to their own conclusions. 

Explain how this exercise relates to the Theory of Comparative Advantage.

Trade Lesson 2 PowerPoint Presentation

Time: 40 minutes
Skills: Holistic Thinking
Objective 2
Related Resources:
-  Global Trade Lesson 2.pptx.
-  Mankiw, N.G. (2008). Interdependence and the Gains from Trade. Principles of Microeconomics, 5th Edition, South-Western Cengage Learning.

Present the PowerPoint presentation. Use the glossary to define any unknown terms
 
Discussion Questions:

  • Why do we choose to be interdependent?
  • What are the driving forces behind trade?
  • If one person is good at producing every good, then how can we determine specialization?

Activity 1.
Scenario: Kim works 4 hours a day.  He takes 30 minutes to make a book and 60 minutes to make a pen.  Draw Kim’s PPF (production possibilities frontier). Find the OC (Opportunity cost ) of book and pen for Kim.

Activity 2.
1. Country A takes 40 minutes to make a car, and 30 minutes to make a computer.  Country B takes 48 minutes to make a car, and 40 minutes to make a computer.  Total work time is 4 hours for both.  Draw PPFA and PPFB in one diagram having car in the X-axis.  Show the numbers and labels.

What is the OCCAR for Country A? b) What is the OCCAR for Country B?  Express in number, not in fraction.  c) Is there any possibility of trade? If so, which country will export car?

Trade Lesson 2 Ethical Issue Activity

Time: 20 minutes
Skills: Holistic Thinking
Objectives 2 and 3
Related Resources:
- Globalization Ain’t All Bad, Really!. (2010, November 16) Managing Gods Money. Retrieved from:  http://managinggodsmoney.com/wordpress/?tag=comparative-advantage

This activity is to be used for both models of comparative advantage (Ricardian and Heckscher-Ohlin models). The concept of comparative advantage seems like straight-forward economic concept. A country is said to have a comparative advantage in whichever good has the lowest opportunity cost. That is, it has a comparative advantage in whichever good it sacrifices the least to produce.

The everyday choices that we make are, without exception, made at the expense of pursuing one or several other choices. When you decide what to wear, what to eat for dinner, or what to do on Saturday night, you are making a choice that essentially denies you the opportunity to explore any other options. The same holds true for individuals, companies, or countries producing goods and services.

Students should research the major exports of a developing country and answer the following questions:

  • What are these countries major exports and/or products?
  • Who are the long-term and short- term benefits and disadvantages of pursing these industries?
  • What are the land and labor constraints on these industries? How should these constraints inform government policy for developing certain industries?
  • What impact do these industries have on the environment, health care, education, politics, etc?
Trade Lesson 2 Conclusion

Time: 5 minutes
Skills: Holistic Thinking
Objectives 2 and 3
Related Resources: n/a

Follow-up to the original class activity: Has anyone changed their mind on the distribution of labor involved in the Habitat for Human exercise? Why or why not?