interdependence - InterdependenceandtheGainsfromTrade 00:52...

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Interdependence and the Gains from Trade 00:52 Trade with people everyday People don’t do this bc the gov’t or anyone tells them too they do it because they also want something in return Looking at what exactly people get when they trade Why do people choose to become interdependent A Parable for the Money Economy People specialize in what they can do best and then trading with the other Production Possibilities PPF Model Production Possibilities Frontier Shows the various mixes of output that an economy can product Illustrates one of the Ten Principles of Economics: People face trade off’s When straight line give up one thing for the other When self sufficient- then the PPF= the consumption production frontier—produce and consume Useful when showing trade-off’s, that will be faced but don’t actually show what will happen Specialization and Trade When new line of PPF that is showing the production with trade Result of specialization and trade, people can consume more of both without working any more
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interdependence - InterdependenceandtheGainsfromTrade 00:52...

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