Trade ProblemsStandard 12.2: Students analyze the elements of America’s market economy in a global setting

Standard 12.6: Students analyze issues of international trade and explain how the U.S. economy affects, and is affected by, economic forces beyond the U.S. borders.

SWBAT: Understand the terms of trade by doing trade problems correctly

Warm-up What is specialization? When will countries trade? What will countries trade?

Terms of Trade:1. No nation will trade unless it gains from the

trade.

2. The terms of trade must fall between the domestic exchange equation of each nation.

United States South Korea Equation of Exchange: Equation of Exchange:

•AA in PCs:

•AA in DVDs:

•CA in PCs:

•CA in DVDs:

Trading Between Countries

United States South KoreaPCs PCs

DVDs DVDs40

40

80

80

Answering the questions…

Terms of Trade: United States will trade 1 ________for more

than _______ and less than __________. South Korea will trade 1 ______ for more

than _____ and less than __________.

Try the next ones on your

own!

Trading Between Countries

Mexico Francecorn corn

wheat wheat50

30

100

90

Answers: AA in corn: AA in wheat: CA in corn: CA in wheat

Terms of Trade Mexico will trade 1

_______ for more than _______ and less than _______.

France will trade 1 _______ for more than _______ and less than _______.

Trading Between Countries

China Canadashoes

T-shirts

80

100

40

100

shoes

T-shirts

Answers: AA in shoes: AA in t-shirts: CA in shoes: CA in t-shirts:

Terms of Trade Canada will trade

1 _______ for more than _______ and less than _______.

China will trade 1 _______ for more than _______ and less than _______.

3. Try Your Own!!!1. Make up a trade problem of your

own.2. Get a classmate to check your

problem and double check your answers. Get his/her signature on your paper to move on.

3. Due in 15 minutes!!!