1. Unit 5, Lesson 14 International Trade AOF Business Economics Copyright © 2008–2012 National Academy Foundation. All rights reserved.

2. Trade dates back to prehistory Were the Native Americans in your area known for trading particular items? Since before recorded history people from one place have traded with others for things not easily available to them.

3. What is made in your town or area and exported to other states or countries? Through trade, countries exchange resources, products, and services OilManufacturing Computers Grains Cattle Fruits Media Gold Fish Lumber Cars Natural Gas

4. Which factors of production do you think are most important for the invention of new consumer electronic products? Countries with trade advantages produce most efficiently Countries tend to produce what is easy and profitable for them. That’s why Saudi Arabia produces oil and Colombia produces coffee. Oil is abundant and easily accessible in Saudi Arabia, and Saudi has ports from which to transport it in large oil tankers. Colombia has a moist, temperate climate perfect for coffee, and its Atlantic and Pacific ports provide easy transport.

5. There are many factors that give advantage What gives your region an advantage in the goods it creates? Many factors give trade advantage, including: ● Natural resources ● Affordable labor ● Educated workforce ● Access to transportation ● Climate ● Access to financing

6. Comparative advantage accounts for opportunity costs Why does Costa Rica produce so much coffee, when it could just as easily grow mangos? Because resources are limited, producers must make decisions about resource allocation. For example, while a tropical country could grow many different types of food products, it should choose the ones that would bring the greatest returns.

7. Not all trade is free trade… While comparative advantage helps explain what countries produce and should produce, there are other factors affecting trade. Governments sometimes seek to regulate imports and exports through a variety of measures, including tariffs, import restrictions, and subsidies. You’ll get a chance to explore trade barriers later in the lesson.