The Gains from International Trade in the PPC Model

Now that we've established the difference between absolute and comparative advantage, we can proceed to how countries stand to gain from trade when they specialize in and produce the goods for which they have a comparative advantage. In this lesson we will explain how a "real exchange rate" can be determined between two goods and two countries that is mutually beneficial for both countries and then show how trade can increase the total possible level of consumption and effectively shift the PPC curve outwards.
Want to learn more about economics, or just be ready for an upcoming quiz, test or end of year exam? Jason Welker is available for tutoring, IB internal assessment and extended essay support, and other services to support economics students and teachers. Learn more here! econclassroom.c...

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[@ericaarasick]

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[@revblack8795]

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[@drpaololimuap8261]

Interesting explanation. One thing though: didn't you mean 39 x 0.4 rather than 40 x 0.4?

[@missfairtrade]

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[@TheGreatiesWorld]

I think its suppose to be 39a rather than 40a, just wondering if u made a mistake there

[@blessedgomana5363]

Was a mere mistake dear..gud ting u payng atention. Was sposed to be 39 by .4 =15.6

[@mrsfelix998]

Yeh I realized also

[@waliullahwardak787]

woow, thank you for such a great video. It was really helpful for me to understand the concept of Comparative Advantage.

[@shalinihulangamuwa6147]

excellent, it was really helpful for me to understand rather my lectures in school

[@lizzyyiu937]

Thank you for your video. It help me a lot. May I ask what app do you use in your course? I think it very intellegent and convenient to put all the texts, images, diagrams, and tables together. Please tell me the name of the app. Thank you!

[@mjselfmadehimself]

insanely helpful, thanks so much

[@MuhammadTahir-ph3gs]

please give the table example of gain from trade

[@natalieserrano4726]

hello! may I ask why is it 40 apples and not 39 apples?

[@glennwatson3313]

Since Korea can make that many phones what would the exchange rate shake out to be?

[@reemalawneh554]

👍👍

[@glennwatson3313]

Is it true that while the U.S can satisfy Korean demand for apples and still have 9 left over, Korea can’t satisfy American demand for 15.6 phones since even with all its resources devoted to phones it can only produce 12 phones?

[@kavitabadaye452]

I got a question ,there is transport cost,how it affect trade

[@blessedgomana5363]

In ricardo theory.certain assmptions where put forwad ncldng holding transport cost, constast cost production dspite increase in output owing to specilisation, no protectionism of domestic infant industries, immobility of intl factors of production prefentially labour he thot of z highyl skilled.there are only 2 cntries in world, freeze currency exchange rate whc z inevitable in intl trade...... Thz were hiz assmption n indeed ey dnt hild true in e real world.for nstance high transport cost cn supres e bnfit from gains in trade

[@XDN_MasterHomie]

Apples, Agriculture???

[@josephdistefano9740]

I'm still confused.

[@MrMarkgyuro]

what is the problem? :)

[@AidanLeyne]

Nobody can see your green line