1. Trade Theory

2. International Trade and Globalization
Nations buy goods from other nations
This allows nations to specialize creating greater economic efficiency
This creates better market prices and better standards of living for importing and exporting nations

3. Trade benefits all parties
Economic principal of international trade: both buyer and seller benefit from transaction
Specialization identified as most important mutual benefit from international trade

5. Absolute Advantage
Def: The capacity of one economy to produce a good or service with fewer resources than another
Individual, region or nation can produce something more efficiency than another
Eg Saskatchewan has one over BC in making wheat

6. Comparative Advantage
Def: The capacity of one economy to produce a good or service with comparatively fewer resources than another
One nation has absolute advantage in every field of production, chances are that it will have a greater advantage in some fields than others. These differences in relative efficiencies, or comparative advantage are all that is required to make specialization and trade economically beneficial for individuals, regions and nations

7. Comparative advantage contd
Comes from local, regional and national variations that exist in distribution of productive resources
Relative Factor endowment: distribution represents what a community, province or nation is naturally given to work with
Relative Factor Intensity: efficiency represents how a particular resource endowment is put to use.
Variations with intensity and endowment create local, regional and national conditions of comparative advantage that promotes cooperation and trade

8. Terms of Trade
Rate at which a country’s exports are exchanged for its imports
Establish an international price for one product in terms of another product. Depends partly on domestic opportunity costs

9. Read pgs
Add to your notes examples if that will help you