Video+Outline

**Video outline. ** By Carolina Lista, Rubena St.Louis and Carlos Mayora
 * Global economics, global exchange 2: **

On section 1 (0:02 – 1:55)

Main idea: The one and principal reasons for the free trade is the comparative advantage Key concepts: Example
 * Comparative advantage:** Is when one country produce specializes in the products a low cost ofproduction about the world in comparison other good which have a high cost of productioncompared to the restof the world.
 * Economy of scale:** is when unit price decrease with increasing quantities produces

On section 2 (1:57 – 3:06) Main idea: The comparative advantage produce a the good economy, goinghand in hand withthe opportunity cost.
 * **Countries** ||  **Products**  ||  **Reasons for specialization**  ||
 * Pakistan || Rice and mangas || Possess inter-industry trade ||
 * Sweden || Paper and steel || Cold weather, forests and green access ||
 * Opportunity cost:** Is the cost inversion available recourses, in opportunity cost looking for the best investment
 * An example of opportunity cost** is when the person decide inverting your saving in a bank which offeredan interest rateof 15%, in change the other bank the offered, the same person, an interest rateof 12%. The person deposit their savings in the bank offered the lowest interest rate.

Complete the chart with the corresponding information.

|| 6% produce car || The opportunity cost in china is about one jeans and one car || ||
 * __Country__ ||  __No. jeans produced__  ||  __No. cars produced__  ||  __Opportunity__ __cost__  ||
 * China || 6% produce jeans
 * United State || 10% produce jeans || 21% produce || The opportunity cost in United Estate is about one car and two cars

United State___ has a comparative advantage in ____Automobiles China_____ has a comparative advantage in ____ Jeans

On section 3 (3:08 – 4:49)

Main idea of: talk about comparative advantage, claiming that countries specialize in exporting goods that require large amounts of production factors in the comparatively more abundant Key concepts:

Hechscher and Ohlin theory: Tries to explain how international trade flows. Major factors in labour productivity are: 1. Skills of the workers 2. Machinery the workers have to use 3. Organization of the frim Example: __(Example)__ ||  __Type of workforce:__  ||  __Type of industry:__  || __Example of product__ ||
 * __Type of country:__
 * China || cheap || capital intensive || Automobiles ||
 * Libia || Cheap and public || intensive || Textiles ||