Lesson Objectives Define key terms such as international trade, factors of production, production possibilities, absolute advantage, comparative advantage, and terms of trade. Explain how international trade creates interdependent relationships between countries. Describe how factors of production influence the exports and imports of countries. Calculate the opportunity cost of producing one unit of a good in terms of another good. Create a trade agreement between two “countries” based on comparative advantage and terms of trade. Describe the benefits and costs associated with free trade.

Introduction to Trade “Did you ever stop to think that you can’t leave for your job in the morning without being dependent on most of the world? You get up in the morning and go to the bathroom and reach over for the sponge, and that’s handed to you by a Pacific islander. You reach for a bar of soap, and that’s given to you at the hands of a Frenchman. And then you go into the kitchen to drink your coffee for the morning, and that’s poured into your cup by a South American. And maybe you want tea: that’s poured into your cup by a Chinese. Or maybe you’re desirous of having cocoa for breakfast, and that’s poured into your cup by a West African. And then you reach over for your toast, and that’s given to you at the hands of an English-speaking farmer, not to mention the baker. And before you finish eating breakfast in the morning, you’ve depended on more than half of the world. This is the way our universe is structured; this is its interrelated quality. We aren’t going to have peace on earth until we recognize this basic fact of the interrelated structure of all reality.” —Dr. Martin Luther King Jr. Christmas sermon on peace, 1967

Ranking U.S. Trading Partners (Q1 2016) With a partner or small group, rank each country from 1 to 10, with 1 being the highest value trading relationship and 10 being the lowest value trading relationship. Top 10 U.S. Export Partners Top 10 U.S. Import Partners Top 10 Total U.S. Trade Partners   Japan Belgium Germany China Canada United Kingdom Hong Kong Mexico South Korea Netherlands France India Italy Taiwan

Ranking U.S. Trading Partners (Q1 2016) How did you do? Were there any surprises? Top 10 Export Partners Top 10 Import Partners Top 10 Total Trade Partners   Canada Mexico China Japan United Kingdom Germany South Korea Netherlands Hong Kong Belgium France India Italy Taiwan

Wait for the quiz to launch. Trade Infographic Game Go to the following URL: https://b.socrative.com/login/student/ Room # (teachers, insert Socrative room number here) Wait for the quiz to launch. Use the print copy of the trade infographic or open another browser window and go to the following URL for the digital copy: https://www.frbatlanta.org/education/classroo m-economist/infographics/trade/full-view.aspx

Trade Infographic Game Which team was most productive? Productivity = Number of Correct Responses (Output) Number of Minutes Worked (Input)* *To the first decimal point… 6 minutes 25 seconds = 6.4 minutes EXAMPLE: 7 correct answers 6.4 minutes = 1.09 correct answers per minute Group 1 Group 2 Group 3 Group 4 Group 5

Trade and Comparative Advantage Simulation

Comparative Advantage Simulation Go to the following URL: https://b.socrative.com/login/student/ Room # (teachers, insert Socrative room number here)

Press Release Assessment on EconLowDown Go to the following URL: https://www.Econlowdown.org/student Enter your user name and password from The “Welcome to Econlowdown” handout your teacher provided Select the Written Assessments tab Complete the assessment that begins For Immediate Release: The Country of ___?___ Announces New Trade Agreement