Chapter Outline

32.1 The Gains from Trade

32.2 The Determination of Trade Patterns

AFTER STUDYING THIS CHAPTER YOU WILL BE ABLE TO

Trade between peoples and nations has been going on throughout
human history, and humans have gone to great lengths and endured
severe hardship in order to reap the benefits of trade. Centuries ago, for
example, the inhabitants of remote islands in Southeast Polynesia

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 Learning Objectives (LO)

1. explain why the gains from trade depend on the pattern of

comparative advantage.

2. understand how factor endowments influence a country’s

comparative advantage.

3. describe the law of one price.

4. explain why countries export some goods and import others.