ECONOMICS STANDARD FOUR: Students will examine the patterns and results of international trade [International Trade].
Students will understand that:
- Individuals and nations trade when all parties expect to gain.
- Nations with different economic systems often specialize and become interdependent as a result of international trade.
- Government actions that promote competition and free trade among people and nations increase the health of an economy and the welfare of nations.
As specialization and the division of labor have increased, individuals, communities, and nations have engaged in trade which increases the standard of living. By specializing in what one can produce at the least cost and trading that with others, efficient use of resources can be attained and overall benefits increased. Economists call this process comparative advantage. Costs incurred by international trade include unemployment increases in the short run as labor resources are reallocated. Benefits from that trade are lower prices and better quality to consumers whose purchasing power increases. As a result of international trade, people on the planet have become more and more interdependent. Economics as a discipline provides the lens for focusing on how best to use the world’s limited resources.