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Interdependence and the Gains from Trade
Chapter 3
Copyright ? 2001 by Harcourt, Inc.All rights reserved.?? Requests for permission to make copies of any part of thework should be mailed to:
Permissions Department, Harcourt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777.
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Interdependence and Trade
Consider your typical day:
You wake up to an alarm clock made in Korea.
You pour yourself some orange juice made from oranges grown in Florida.
You put on some clothes made of cotton grown in Georgia and sewn in factories in Thailand.
You watch the morning news broadcast from New York on your TV made in Japan.
You drive to class in a car made of parts manufactured in a half-dozen different countries.
…and you haven’t been up for more than two hours yet!
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Interdependence and Trade
Remember, economics is the study of how societies produce and distribute goods in an attempt to satisfy the wants and needs of its members.
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How do we satisfy our wants and needs in a global economy?
We can be economically self-sufficient.
We can specialize and trade with others, leading to economic interdependence.
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Interdependence and Trade
A general observation . . .
Individuals and nations rely on specialized production and exchange as a way to address problems caused by scarcity.
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Interdependence and Trade
But, this gives rise to two questions:
Why is interdependence the norm?
What determines production and trad
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