Chapter 3 Reflections: Interdependence and the Gains from Trade.

1. What surprised you most about the concepts in this chapter?  Why?
2. What is your opinion about international trade?  Overall is it good or bad?  Why?

There were several concepts in this chapter dealing with Interdependence (countries/people/entities being mutually reliant on one another) and the benefits or gains from trade...

1. Specialization and Trade

2. Absolute Advantage
3. Opportunity Costs and Comparative Advantage
4. Comparative Advantage and Trade
5. The Price of Trade
6. The US trading with other countries. 

I think the thing that surprised me most about the concepts in this chapter is that two (or more) people could work together, each produce what they were good at producing, each produce what the other was producing and both come out benefiting from the other's work, neither having to work any longer or harder. 

The example of the potato farmer and the cattle rancher was used to talk about how much meat the rancher produced in a specific time and how many potatoes the farmer was able to produce in the same time and how they ended up trading with each other. While it seemed that the potato farmer wasn't producing as many potatoes and as much meat as the cattle rancher the potato farmer had the comparative advantage (she had the ability to produce potatoes at a lower opportunity cost than the cattle rancher). The cattle rancher who produced both meat and potatoes still had absolute advantage because he was able to produce more of both in a shorter amount of time. 

International Trade

Because of technology our world seems to be a much smaller place. We are able to send and receive data almost instantaneously to anywhere in the world. We are able to communicate and participate in dialogues with anyone almost anywhere. This was not always so. 

The question was, "Overall, is international trade good or bad?" I think it's inevitable. I think it's not just good, but great! I think the more that we participate in trade with other countries that we are acting more as a global citizen than just a citizen of the US or UK or India or wherever. Trade bridges nations together instead of dividing them. We can all benefit from the goods and services from other countries and it helps us to get out of our bubble, experience new ideas and concepts, broadens our horizons, makes us richer (not just in the financial sense) as a people. We can all identify with one another and we can all learn from one another.