Comparative Advantage and Gains from Trade by Pramod Reddy https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c by Pramod Aramareddy, 100807396 en-us 2021-04-07 19:06:08 UTC 2025-03-11 07:09:18 UTC hello@padlet.com Video #1 pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393007869 According to Adam Smith, countries with an absolute advantage in the production of particular products should specialize in the production of that particular product. But according to David Ricardo, specialization should be done based on the opportunity cost of production. This model is called comparative advantage. It is better to specialize using comparative advantage as total production will be higher than using absolute advantage.

I have chosen this video because this video simplified the topic by using a story and a simple example on an island. I want to use this video to open discussion on this topic without complicated graphs and data.]]> 2021-04-07 19:06:28 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393007869 Video #2 pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393243517 This video starts with an example of a person who exchanged a pin with a house. He explains absolute advantage, comparative advantage and the terms of trade in this video using squares and triangles. Absolute advantage is the advantage that one has over others in a particular product in a production possibility curve. Whereas Comparative advantage is the advantage that one has over others in respect to the opportunity cost of that production. The terms of trade are the range of possible exchange rates where both parties would benefit.

I have selected this video as this video explains terms of trade which is very crucial in understanding this concept by using graphs.

]]> 2021-04-07 20:14:25 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393243517 Video #3 pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393247409 This video explains how specialization and trade benefit both parties using comparative advantage, even without absolute advantage. Here South Korea has a comparative advantage in smartphone production and the USA has a comparative advantage in the production of apples. Here if both countries specialize in the product that they have a comparative advantage and trade with each other, they can consume more than the actual production possibilities curve can offer without trade. But this will depend on the terms of trade that they can agree upon.

I have chosen this video, as this is a real-world application of knowledge on international trade.


]]> 2021-04-07 20:15:37 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393247409 Video #4 pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393343224 In this video, she explains the importance of the size of the trade. Even though the trade is beneficial to both parties, It is important for the trade to be of optimal size to benefit both parties. Here she explains how this is important when both of the parties specialize, but the size of the trade is small. In this scenario, we may have an imbalance in the products.

I have used this video over other videos because I want to explain that there may be a downside if we specialize and completely rely on trade to satisfy our needs. For example, recently a ship blocking the Suez Canal led to a shortage of products in Europe.

]]> 2021-04-07 20:48:20 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393343224 Introduction pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393352000 This is concise information on the topic of comparative advantage and gains from trade. In this topic, We can understand the reasons for the trade, benefits of trade and the factors dictating the trade concerning comparative advantage. ]]> 2021-04-07 20:51:47 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393352000 Website #1 pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393506003 This is in-depth information about international trade and explains how Canada and the international economy are intertwined. It also explains the importance of international trade to the Canadian economy. explains comparative advantage and how this comparative advantage arises due to climate, labor availability of resources capital Technology and external economies. It explains how international trade increases consumption. Even though it explains the importance it also explains why total specialization cannot occur using opportunity cost tests etc. it States who are the losers and winners of international trade. This has a very good explanation about the rise and fall of North American manufacturing in terms of comparative advantage.

This document has lot of information. It is well written. every one should read this to gain insight into international trade in Canadian perspective. ]]> 2021-04-07 22:02:36 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393506003 Website #2 pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393561856 This starts with Benjamin Franklin's statement " no Nation was ever ruined by trade". This explains why attitudes towards international trade should be positive with some evidence. It exemplifies the growth of Japan, South Korea and India after opening to international trade. It also states that no modern country was able to prosper by restricting trade. It further explains the reason behind this prosperity is due to comparative advantage inside. It further explains absolute advantage and comparative advantage. It also includes a few questions to check our understanding.

I have chosen this website as this has questions to check our understanding.]]> 2021-04-07 22:35:31 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393561856 image #1 pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393600714  This photo illustrates how sufficient societies produce less than a trading society by using mathematical formulas. In the first case, the country was self-sufficiently allocating resources to produce 45 units. whereas in the second case countries were trading and produced 51 units]]> 2021-04-07 22:59:07 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393600714 Image #2 pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393619435 This image shows two scenarios. In the first scenario, either Mary or Tom has an absolute advantage over each other. Whereas in the second case only Tom has an absolute advantage, but Mary has a relative advantage in grapes.]]> 2021-04-07 23:10:42 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393619435 Website #3 pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393630862 This website explains the history of comparative advantage. It states that protectionism is unnecessary and free trade is important. it explains that absolute advantage is not always required to benefit from A trade. trading can make products better faster and cheaper for both partners. It explains that a country should specialize in products that have a comparative advantage with an example. it further explains free trade policies and their advantages. it further explains why complete free trade is not realized despite its advantages

I have chosen this website as this explains the topic with an historical perspective and at the same time explains the hardships in agreeing a free trade agreement.


]]> 2021-04-07 23:17:05 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393630862 Website #4 pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393652867 This website explains new and emerging trends in comparative advantage in services due to technology. It states that previously only goods were able to be exported, whereas services were not exported. This is due to the inability to export service. but in recent years due to advancements in information technology, services such as call centers, banking and entertainment are exported from other countries such as India. this website states that protectionism is only a temporary fix, preferred by politicians, but in the long run International competition, I will improve a Nation's competitiveness.

I have chosen this website as this is the only website that talked about the service sector as an export.
]]> 2021-04-07 23:30:29 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393652867 Opinion pramodreddy2330 https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393695143 Research on this topic taught me very important lessons and the reasons for international trade. The most shocking aspect was to know that Canada exports nearly 30% of its GDP.

 These days politicians like Donald Trump are weaponizing trade and hiking tariffs. This is not sustainable and counterproductive to the overall economy. Apart from these videos, I have researched many more topics. overall helped me to gain some insight into economics. This assignment my perspective on trade.

I may not explain all this information to my peers, but I can choose my leader wisely while I vote.
]]> 2021-04-07 23:55:31 UTC https://padlet.com/pramodreddy2330/oci5c6p1z9md6x8c/wish/1393695143