Teacher's Notes
Theme:
Although free trade is more efficient, nations tend to protect their economies from foreign competitors.Sub-theme:
Protective policies enrich special interests at the expense of overall efficiency.Concepts:
- free trade
- protection
- comparative advantage
- tariff
- infant industry
Performance objectives -- this lesson focuses on developing skills at:
- Constructing arguments on economic issues
- Designing and performing calculations on trade figures
- Envisioning the probable effects of trade policy choices
Initially, on the island, 2,000 workers x 1 bushel apiece = 2,000 bushels of widgets.
1,000 workers x 2 cases apiece = 2,000 cases of gadgets.Initially, on the continent, 2,500 workers x 2 bushels apiece = 5,000 bushels of widgets
500 workers x 10 cases apiece = 5,000 cases of gadgets.After trading, the island will have:
2,250 workers producing 1 bushel apiece for home use + 750 workers producing 1 bushel apiece for export = 2,250 bushels of widgets.
(We're assuming that there will be demand for all 2,250 cases of gadgets exported from the Continent.)The Continent will have:
2,250 workers x 2 bushels apiece = 4,500 bushels + 750 bushels of imported widgets = 5,250 bushels of widgets.
750 workers producing 10 cases apiece = 7,500 cases of gadgets - 2,250 sent overseas = 5,250 cases of gadgets.| Reading | Activities | Further Investigations | Economic Studies Index |