Trade Whats it good for Absolutely everything Mr

Trade – What’s it good for? Absolutely everything! Mr. Burdette – Economics MHS 2012 -2013

The Renaissance Man (or Woman) • What does it mean to be a Renaissance man? Or woman? • Why could this lead to being impoverished?

Story of Birkhaman • Birkhaman was a poor Nepalese man • He was a butcher, furniture maker, roofer, construction worker and professional cook • He was still very poor • How could this be?

Specialization and Interdependence • Adam Smith – Wealth of Nations • Division of Labor • Encourages massive city centers

Economic Interdependence • With specialization and trade, we depend on other people or countries to produce goods and services • Think about your lunch that you will eat today, how is this an example of economic interdependence?

Voluntary Exchange • Two parties are free to trade • Both parties incur a cost to gain a benefit • What is the issue with a barter economy?

Coerced Trade • What is the difference between a big business and a big government?

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Barter Economy • Barter economy requires a coincidence of wants and therefore is extremely inefficient. • What comes out of the difficulties of the barter economy?

MONEY! • Because of the Coincidence of Wants – Money is created to make trade easier

How does trade make us wealthier? • Trade moves goods to people who value them • Trade increases the quantity and variety of goods available • Trade lowers the cost of goods • Trade creates more winners than losers – Creative Destruction

Not a “zero-sum” Game! • There are few “losers” in Economics • Trade is truly voluntary (voluntary exchange) • Who decides what to buy?