Production and Gains from Trade
AbstractThis paper describes a classroom game in which students make production and trade decisions. Each student represents a country and decides how much of two goods to produce, how much to exchange with a partner country, and whether to specialize in the production of one of the two goods. In introductory level classes, the game helps students understand the notion of comparative advantage in production and distinguish between gains from pure exchange and gains from specialization and trade. Class discussion focuses on the concepts of production possibility frontier, marginal productivity of inputs, and on the determination of the price ratio at which trade may occur. In advanced classes, the exercise facilitates comparisons among different models of international trade and serves as a platform from which to introduce and discuss key issues in current research and public debate.
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Bibliographic InfoPaper provided by Department of Economics, College of William and Mary in its series Working Papers with number 16.
Length: 26 pages
Date of creation: 11 May 2005
Date of revision:
Classroom Experiment; International Trade; Comparative Advantage; Production Possibility Frontier; Price Ratio;
Find related papers by JEL classification:
- F10 - International Economics - - Trade - - - General
- A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
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