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Why Do Countries Trade

The document instructs students to analyze trade data between the United States and developing/developed countries for agricultural and industrial products, identify examples of absolute and comparative advantage, and explain why most trade occurs due to comparative advantage. Students are asked to compare worker hours required to produce goods and identify which countries have lower production times.

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Evelyn Ojeda
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82 views2 pages

Why Do Countries Trade

The document instructs students to analyze trade data between the United States and developing/developed countries for agricultural and industrial products, identify examples of absolute and comparative advantage, and explain why most trade occurs due to comparative advantage. Students are asked to compare worker hours required to produce goods and identify which countries have lower production times.

Uploaded by

Evelyn Ojeda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Name: Evelyn O.

__________________________________________Instructor___________________________
________

1. Use the chart in the lesson to identify one developing country (choose Country A or
Country B) and one developed country (choose Country C or Country D) to compare to
the United States. Use the tables below to record data from the chart in the lesson for
each country. Then respond to the analysis questions.

Additional research is not required to complete this assignment. Please use only the
information provided in the chart in the lesson for countries A, B, C, D, and the United
States.

Table 1: Identify one developing country (A or B) and one developed country (C or D)


along with the United States. Complete a trade analysis for agricultural products.

Hint: Number of additional worker hours to produce one unit of citrus instead of one unit
of corn = number of worker hours to produce one unit of citrus – number of worker hours
to produce one unit of corn

Number of additional worker hours to produce one unit of


Corn Citrus citrus instead of one unit of corn

United States 2 4 2

Developing Country, A 6 10 4

Developed Country, D 4 8 4

Table 2: Identify one developing country and one developed country along with the United
States. Complete a trade analysis for industrial products.

Computer Number of additional worker hours to produce one unit of


Apparel Software computer software instead of apparel

United States 2 4 2

Developing Country, A 4 12 8

Developed Country, D 2 4 2

2. Analysis—Using the data you collected, answer each of the following analysis questions
in well-written paragraphs in your own words.
A. Identify an example of absolute advantage relative to the United States from your
data tables. Be sure to identify which country has absolute advantage (United
States or country A, B, C, D), the product, and data to support your claim. Tip:
When considering absolute and comparative advantage, worker hours to
produce one unit is a reflection of productivity.

An absolute advantage relative would be that the United States produces more
corn and citrus with less worker hours than country A, a developing country.
While it only takes the U.S 2 worker hours to produce corn, it takes country A 6
hours.

B. Identify an example of comparative advantage relative to the United States from


your data tables. Be sure to identify which country has comparative advantage
(United States or country A, B, C, D), the product, and data to support your claim.

An example of comparative advantage would be that the number of additional


worker hours to produce one unit of computer software instead of apparel for the
United States is lower than that of country A. While the U.S has 2 additional
worker hours, country A has 8, which means it would be better if it specialized in
apparel.

C. Explain why most trade occurs because of comparative advantage. Be sure to


provide examples from the data tables or from the lesson to support your answer.

Most trade occurs because of comparative advantage because both countries


need to trade what they lack in order to make up for what they need, benefitting
from one another, instead of having one place control all trades. Countries trade
in order to obtain resources and products they are unable to produce efficiently,
but are easier to obtain and produce for other nations. Trade helps countries
meet the economic goal of efficiency. For example, country A and the United
States could trade; country A giving the United States corn and citrus while the
United States trades them with computer software.

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