1. T RADE

2. S TARTER L OOK AT THE LABELS ON YOUR CLOTHING, THINGS IN PENCIL CASE ETC WHAT COUNTRIES ARE THEY MADE IN ?

3. W HY DO PEOPLE TRADE ? We specialise in the activity we are best at. Then we trade the surplus we create, for goods and services we want and need. I am a doctor because I am better at that than any thing else. I am a farmer because I am better at farming than anything else. These two individuals will rely on one anther. The doctor relies on the farmer to provide him food and the farmer relies on the doctor to provide him with medical care.

4. W HAT ARE THE ADVANTAGES OF PEOPLE S PECIALISING AND TRADING ? They are able to make the greatest productive contribution by producing what they are best at. Producer better good or service than many others Create a surplus of what they produce, which they can exchange for other goods and services Can gain access to other goods and services that we may be incapable of producing ourselves.

5. W HY DO WE TRADE ??? Individuals don’t have enough resources to satisfy their unlimited wants, and neither do countries. This is because a country is made up of individuals.

6. W HY DO WE T RADE ? NZ makes better use of it’s resources by concentrating on producing agricultural products. Just like Japan with cars. We could make cars as well but just not as cheaply as Japan. Japan could also produce sheep, but just not as cheaply as we can.

7. T RADE – N OTES TO COPY Trade is the exchange of goods(tangible commodities, visibles ) and services (intangible commodities or invisibles) Trade occurs everywhere, between regions within a country (regional trade) or between different countries (international trade) Exports – Goods and services produced in NZ and sold to other countries ‘Imports – Goods and services produced overseas and sold to NZ

8. I NTERNATIONAL T RADE Throughout the world different countries have different factor endowments Factor endowments = resources of an economy. E.g. Australia is rich in minerals and metal ores whereas NZ has fertile soil with substantial water resources whereas Saharan Africa does not.

9. NZ AND A GRICULTURE Because NZ has excellent growing conditions, NZ exports largely agricultural products. Because our country has few minerals or ores, we import a lot of high- value manufactured goods.

10. PPC’ S AND TRADE Without trade NZ would have to produce a wide range of products to satisfy consumer choice. With trade a country can allocate it’s resources more efficiently by concentrating on what it does best (at a lower cost or opportunity cost). By having access to more efficiently produced imports a country can get the best out of it’s own resources.

11. I NTERNATIONAL T RADE IN S ERVICES Services Traded to and from NZ include Transportation Travel Communication services Construction services Insurance services Financial services Computer and information services

12. O NSHORE AND O FFSHORE S ERVICES These are services that are traded internationally. Onshore: services sold to overseas users but consumed/used within NZ. Examples: Japanese tourists going on the Shotover Jet, eating out at restaurants, staying in a motel. Offshore: services sold to overseas users and consumed/used outside of NZ. Example: Air New Zealand transporting American passengers from Singapore to Sydney.