Unformatted text preview: cond most powerful woman in
– She knows how to do household chores.
Brief description and picture taken from http://en.wikipedia.org/wiki/Wu_Yi
3 15:49:02 4 (1) People have different
preference three benefits of trade
(1) Trade makes people better off
when preferences differ. Sep 1995, Pierre
Omidyar (2) Trade increases productivity
through specialization and the
division of knowledge.
(3) Trade increases productivity
through specialization according to
15:49:02 5 15:49:02 6 1 (2) Specialization increases
productivity North, Douglass C., 2005, Understanding
the Process of Economic Change, pp.89: Modern economies require more knowledge
than can exist in a single brain. events happened
in history Specialization ⇒ knowledge↑ ⇒ productivity↑
Without trade, specialization is not possible.
Trade → markets↑ → division of knowledge↑
Entrance of China, Eastern Europe, and Russia
into world markets → stock of engineers↑,
scientists → available knowledge↑
15:49:02 7 internet photo Adam Smith on
specialization: 8 (3) Comparative advantage
A country has a comparative advantage in
producing goods for which it has the lowest
opportunity cost. “One man draws out the wire, another straightens it, a third cuts it, a
fourth points it, a fifth grinds it at the top for receiving the head; to
make the head requires two or three distinct operations... I have
seen a small manufactory of this kind where only ten men were
employed... [who] could, when they exerted themselves, make
among them about twelve pounds of pins in a day. There are...
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