Chapter 2 Economic Activities: Producing and Trading. Costs of Trade. Transaction costs Time and effort needed to search out, negotiate, and consummate a trade May cause trades to not take place Don’t know about the good Shipping costs are too high Don’t like to work with salesperson
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1. Draw the production possibility curves for both countries. (Clothing on y-axis)
2. Which country has the comparative advantage in clothing? Food?
3. The United States and United Kingdom are negotiating a trade of food
and clothing between the countries. If the terms of trade is 25 units of
clothing for 15 units of food, should both counties agree?
What a market is and how is it established.
Questions 1, 5, 12, and 17
Working with Graphs and Numbers: 1, 2, and 5
Do we understand Chapter 2?