KEY POINTS:
• Trade allows us to enjoy goods and services that originate
in many different places
• Sources of trade items sometimes shift over time
• Natural resources, manufacturing infrastructures and
agricultural capacities are not equally distributed throughout
the world. Trade allows people to compensate for this by trading
some of what they have for some of what they need.
• A country has an absolute advantage in the production
of a good relative to another country if it can produce the
good at lower cost or with higher productivity
• A country has a comparative advantage in the production
of a good if it can produce that good at a lower opportunity
cost* relative to another country.
Teacher
notes:
*A great resource for understanding the economics of trade,
especially concepts related to comparative advantage such
as opportunity cost is Professor Steve Suranovic’s web
site, created for his George Washington University economics
courses:
http://internationalecon.com/index.html
http://internationalecon.com/v1.0/ch40/40c090.html
is the specific link to Suranovic’s comprehensive chapter
on understanding comparative advantage.
Another valuable resource is biz/ed, a U.K. web site. One
specific biz/ed link that provides a virtual tour of a country,
a factory and an economy is:
http://www.bized.ac.uk/virtual/
ACTIVITY: Where do things come from?
(grades 8-12, adjust expectations to grade level)
| A. |
Students (individually or in groups) select one of the
following items:
• a natural resource
• a service
• a manufactured product
• an agricultural product
Be sure that something from each of these four categories
is represented. Extra credit might be considered when
students choose more obscure topics (rare or unusual natural
resources, unusual food crops and so on). |
| B.
|
Students
research where their selected item is created. In many
cases, they will find that there are multiple sources
for their item; if this is the case, they might list the
top 5 sources, and perhaps the respective shares of the
world market (it might also be interesting to note any
unusual or unexpected producers). |
| C. |
Students
also research who most commonly consumes the items that
they are studying. There may be many consumers of their
item. Students should list the top 5 consumers (it might
also be interesting to note any unusual or unexpected
consumers). |
| D. |
Students
track the sources and consumers on a map. |
| E. |
Students
consider these questions:
| 1. |
What
would happen if any of the top five producers stopped
creating the item? |
| 2. |
Are
there other regions/countries/states where the item
could be produced but isn’t? If not, why not? |
| 3. |
Have
others produced the item in the past but no longer
do so? What are some reasons why people stop producing
products, and could they do so again by making changes
in production methods or if market conditions change? |
| 4.
|
Are
new resources or alternatives under development?
If not, why not? |
| 5. |
What
is the trend in production (supply) of the item?
Increased or decreased production? How does supply
affect price? |
| 6. |
What
is the trend in consumption (demand) of the item?
Increased or decreased consumption? How does demand
affect price? |
|
| F. |
Students
make a presentation to the class of their findings. Students
should be encouraged to use maps, samples of their item,
charts showing trends and other visual aids. |
Suggestions
for Assessment
Grade on the completeness and complexity of the presentation,
and the depth of research. Alternately, the class can grade
the presentations on clarity, effectiveness and preparation
to answer questions.
|
