econ422_1

econ422_1 - Margaret Dempsey ECON 422 Assignment 1 1 The...

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1Margaret Dempsey ECON 422 Assignment 1 January 22, 2008 1. The first benefit from dealing with strangers outside your immediate clan is the increase in productivity due to the ability of specialization, as described in the text. Upon reviewing examples of this benefit, I do agree that this is a positive contributing factor. However, I am not convinced that it is substantially larger than some of the other benefits you can get from expanding outside the “immediate clan.” One example of this specialization benefit is that it is more efficient and productive for Brazil to produce and trade coffee beans with the United States in exchange for wheat. If the United States focuses their efforts on producing the best wheat as efficiently as possible, it is beneficial not only to the U.S. but to countries that import U.S. wheat, as they can then specialize in making something they excel at as well. The second benefit, as described in the text, is known as the reduction of risk. An
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econ422_1 - Margaret Dempsey ECON 422 Assignment 1 1 The...

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