AB/204 AB204 AB 204 Unit 2 DISCUSSION 1

AB 204 Unit 2 DISCUSSION 1

Unit 2: Economic Models and Trade - Discussion

General Information:

To be an effective learning tool the Discussion Board topics require your active discussion of the topic with at least two of your classmates.

• First post made during, or before, Saturday.
• Posts on at least 3 different days.
• Responses to at least two other classmates.
• Substantive posts that stimulate further active discussion, posts that accurately reflects the learning, that are logical, and clearly presented with correct spelling, word usage, and grammar.
• To be counted as a substantial post, your main post to the Discussion topics should be at least 200 words per Discussion topic.

Basic Economic Models and Comparative Advantage

The Discussion topics include the difference between microeconomics and macroeconomics, the two basic economic models of the Circular-Flow Diagram and the Production Possibility Frontier, and comparative advantage, which is the main force behind interdependence in the market economy and the gains from trade.

Respond to two of the following Discussion topics. Read Chapters 2 and 3, and remember to include references and links to the websites that are important contributors to your posts.

Topic 1

The theory of comparative advantage states that there are gains from trade if countries specialize and optimize their opportunity costs.

1. Why is comparative advantage a driving force behind trade behind trade between regions and countries?
2. Why does specialization lead to welfare improvement? Why engaging in trade is better than trying to be self-sufficient?